The Commission is amending its regulations at 11 CFR 113 to clarify that federal candidates and officeholders may use campaign funds to pay for security measures so long as the security measures address ongoing dangers or threats that would not exist irrespective of the individual's status or duties as a federal candidate or officeholder. The Commission is amending its regulations consistent with prior advisory opinions that authorized such spending on certain security measures, including non-structural security devices; structural security devices; security personnel and services; and cybersecurity software, devices, and services. The Commission's amendments to the regulations also address additional issues raised in prior advisory opinions.

Before promulgating rules or regulations to carry out the provisions of the Federal Election Campaign Act of 1971, as amended (the “Act”), 1 the Commission transmits the rules or regulations to the Speaker of the House of Representatives and the President of the Senate for a thirty-legislative-day review period. 2 The effective date of the final rule is January 1, 2025.

The Act identifies six categories of permissible uses of contributions and donations accepted by a federal candidate, two of which are “ordinary and necessary expenses incurred in connection with the duties of the individual as a holder of Federal office,” and “any other lawful purpose not prohibited by 52 U.S.C. 30114(b).”  3 Under 52 U.S.C. 30114(b), contributions accepted by a candidate may not be converted to “personal use” by any person.

The Act and Commission regulations define “personal use” as the use of campaign funds “to fulfill any commitment, obligation, or expense of a person that would exist irrespective of the candidate's election campaign or individual's duties as a holder of Federal office.”  4 The Act and Commission regulations provide a non-exhaustive list of expenses that, when paid using campaign funds, constitute per se conversion of those funds to personal use. 5 The Commission determines on a case-by-case basis whether the use of campaign funds to pay expenses other than those listed would be a prohibited conversion of the funds to personal use. 6

The Commission has long recognized that if a candidate “can reasonably show that the expenses at issue resulted from campaign or officeholder activities, the Commission will not consider the use to be personal use.”  7

Neither the Act nor Commission regulations identify the use of campaign funds to pay for the costs of security measures for federal candidates or officeholders as per se personal use. In numerous advisory opinions, however, the Commission has permitted the use of campaign funds to pay for various security measures for federal candidates or officeholders.

The Commission has issued several advisory opinions authorizing the use of campaign funds for certain home security upgrades to protect against threats to the physical safety of federal officeholders and their families. 8 The facts presented in those advisory opinions indicated that the threats were motivated by the requestors' public roles as federal officeholders, candidates, or both. The Commission determined in each instance that the expenses for the proposed security upgrades would not have existed irrespective of the candidate's election campaign or the individual's duties as a federal officeholder. 9 Therefore, the Commission concluded that the use of campaign funds to pay for the security upgrades was permissible under the Act and Commission regulations. 10

The Commission has also previously considered the implications of the heightened threat environment faced by Members of Congress collectively, necessitating increased residential security measures even if an individual Member has not received direct threats. For example, in Advisory Opinion 2017-07 (Sergeant at Arms), the Commission considered information from the House Sergeant at Arms about the threats faced by Members of Congress due to their status as federal officeholders and the recommendations of the Capitol Police that Members of Congress install or upgrade residential security systems to protect themselves and their families in response to those threats. In light of that information, the Commission concluded that certain costs of installing or upgrading home security systems in and around a Member's residence would constitute ordinary and necessary expenses incurred in connection with that Member's duties as a federal officeholder and that, therefore, Members of Congress may use campaign funds to pay reasonable costs associated with such home security systems. 11

In two advisory opinions, the Commission has also considered whether campaign funds may be used to pay for window security film as an authorized security enhancement in response to a heightened threat environment faced by federal officeholders. In Advisory Opinion 2022-05 (Crapo), the Commission considered whether campaign funds could be used to pay for a series of residential security enhancements recommended by the U.S. Capitol Police, including the installation of security film “on all accessible windows to prevent surreptitious observation into the residence.”  12 Similarly, in Advisory Opinion 2023-04 (Guy for Congress), the Commission considered whether campaign funds could be used to pay for the costs to purchase and install a security window film to protect a Member of Congress's home. The Commission determined in both instances that window security film, as a removeable security measure designed to mitigate potential threats stemming from the Members' duties as federal officeholders, falls within the category of “non-structural security devices” for which campaign funds could be used, citing Advisory Opinion 2017-07 (Sergeant at Arms). 13

The Commission also has permitted the use of campaign funds to pay for security measures beyond home security upgrades. In Advisory Opinion 2021-03 (NRSC et al. ), the Commission authorized the use of campaign funds to pay for “bona fide, legitimate, professional personal security personnel” as ordinary and necessary expenses incurred in connection with an officeholder's duties. 14 The Commission concluded that such expenses were permissible due to the threats arising from members' status as federal officeholders, including the heightened threat environment faced by Members of Congress collectively. 15

Last, in two advisory opinions, the Commission authorized the use of campaign funds to pay for reasonable cybersecurity expenses as ordinary and necessary expenses incurred in connection with the requestors' duties as federal officeholders. 16 In those opinions, the Commission also determined that the incidental benefit to others of cybersecurity measures, like the incidental benefit to others of home security measures to protect against physical harm, do not change the conclusion that such expenses are ordinary and necessary expenses incurred in connection with a federal officeholder's duties. 17

On April 9, 2024, the Commission published a Notice of Proposed Rulemaking (“NPRM”) in the Federal Register proposing to amend its regulations to authorize the use of campaign funds to pay for security measures to protect federal candidates and officeholders. 18

The Commission's regulations at 11 CFR 113.1(g)(1) through (9) address the personal use of campaign funds. In the NPRM, the Commission proposed adding a new paragraph (g)(10) to address the use of campaign funds for security measures.

Proposed paragraph (g)(10) provided that federal candidates and officeholders may use campaign funds to pay for the reasonable costs of security measures so long as the security measures address ongoing dangers or threats that would not exist irrespective of the individual's status or duties as a federal candidate or officeholder. 19

It included four subparagraphs as follows:

• New 11 CFR 113.1(g)(10)(i), to identify non-structural security devices as a category of security measures for which reasonable expenses would not be personal use and provide a non-exhaustive list of examples of non-structural security devices.

• New 11 CFR 113.1(g)(10)(ii), to identify structural security devices as a category of security measures for which reasonable expenses would not be personal use and include a non-exhaustive list of examples of structural security devices.

• New 11 CFR 113.1(g)(10)(iii), to identify security personnel and services as a category of security measures for which reasonable expenses would not be personal use.

• New 11 CFR 113.1(g)(10)(iv), to identify cybersecurity software, devices and services as a category of security measures for which reasonable expenses would not be personal use.

The Commission received 14 timely comments and two late comments in response to the NPRM. Seven comments were submitted by or on behalf of organizations, and nine were from individuals.

The comments universally supported the Commission's proposal to authorize the use of campaign funds to pay for certain security measures for federal candidates and officeholders and the Commission's proposal to include a non-exhaustive list of examples for which reasonable expenses would not be deemed personal use. 20 Commenters agreed with the Commission's rationale that federal candidates and officeholders should be able to spend campaign funds for security measures given the safety and security threats that are faced by individuals running campaigns and holding federal office. And commenters broadly cited the threats faced by candidates and officeholders and referred to specific incidents of threats and harassment that have occurred involving candidates and officeholders at the local, state, and federal levels.

Although the comments broadly supported the Commission's proposal, some raised concerns, particularly regarding the risks of improper use of campaign funds under the pretext of security spending, such as for security services that may not be bona fide, legitimate, and professional, as discussed further below. Commenters also suggested two additions to the proposed rule, most notably (1) to allow campaign funds to be used to pay for security expenses for the staff and family of candidates and officeholders in addition to the candidates and officeholders themselves, and (2) to clarify that any security services used by the federal candidate or officeholder must be bona fide, legitimate, and professional. The Commission agrees with these commenters and, accordingly, adopts the proposed rule with these two additions, as discussed below.

After reviewing public comments received in response to the NPRM, the Commission is amending its regulations regarding the use of campaign funds to allow the use of campaign funds to pay for certain security measures for candidates, officeholders, members of their family, and employees—as the term is defined at 26 CFR 31.3401 (c)-1—of the campaign or office (hereinafter also referred to as “staff”). The Commission has long recognized that if a candidate “can reasonably show that the expenses at issue resulted from campaign or officeholder activities, the Commission will not consider the use to be personal use.”  21 Consistent with this rationale and prior advisory opinions that have authorized the use of campaign funds to pay for security measures, the Commission is amending the regulatory definition of personal use to clarify that campaign funds may be spent on certain security measures.

As proposed in the NPRM, the Commission is adding a new paragraph at 11 CFR 113.1(g)(10) to address the use of campaign funds for security measures. Paragraph (g)(10) states the basic rule and personal use standard. Subparagraphs (g)(10)(i) through (iv) provide a non-exhaustive list of examples that would not be deemed personal use.

The Commission is adopting paragraph (g)(10) as proposed, with the exception that the final rule will also cover family members and staff of candidates and officeholders. Accordingly, the Commission's new regulation provides that the use of campaign funds to pay for the reasonable costs of security measures for a federal candidate or officeholder or their family and staff is not personal use, so long as the security measures address ongoing dangers or threats that would not exist irrespective of the individual's status or duties as a federal candidate or officeholder. The new regulation also requires that the payment for security measures be made at the usual and normal charge for such goods or services. 22

In the NPRM, the Commission proposed to limit the use of campaign funds for security measures to cover only the “reasonable costs” of such security measures.

The Commission received five comments on the proposed “reasonable cost” standard, four of which supported the proposal and one that opposed it. One of the commenters supporting the proposal urged the Commission to issue guidance or factors to consider in determining reasonableness of security expenses. This commenter suggested that the Commission take into account several factors in determining whether a security expense is reasonable, including: (1) the nature of the specific threat environment faced by the candidate or officeholder, (2) the cost of the security measure and how commonly it is used, (3) whether the security measure was recommended as part of a qualified security assessment, (4) whether the candidate or officeholder (or a member of their immediate family or staff) is a vulnerable person, and (5) whether the candidate's or officeholder's personally identifiable information is publicly available. 23

Another commenter suggested that a “tailoring requirement” should be added, i.e., candidates and officeholders should only be permitted to spend campaign funds on security measures that are “reasonably tailored to addressing ongoing dangers or threats.”  24 In the commenter's view, the tailoring requirement would prevent abuse of campaign funds and ensure that they are used in both a reasonable and limited manner. 25

The commenter opposing the reasonableness standard viewed it as unnecessary. This commenter asserted that the irrespective test in the personal use regulations should be used to determine whether a security expense is permissible rather than adopting a new reasonableness standard.

The Commission agrees with the comments that support the use of the reasonable cost standard in the proposed rule. The Commission finds that the reasonable cost standard is a fair standard that provides appropriate notice to candidates, officeholders, and the public at large, and that the standard strikes the appropriate balance between granting candidates and officeholders the authority to use campaign funds for security needs while limiting such authority to prevent the misuse of campaign funds in the name of security. Therefore, the Commission adopts the rule as proposed in the NPRM, which authorizes the use of campaign funds for reasonable costs.

As proposed in the NPRM, the rule would authorize the use of campaign funds to pay for certain security expenses for both candidates and federal officeholders so long as the security measures address ongoing dangers or threats that would not exist irrespective of the individual's status or duties as a federal candidate or federal officeholder.

The Commission sought comment on whether any distinction should be made between federal candidates and officeholders in how campaign funds may be used to pay for security measures. Most of the commenters agreed that the rule should authorize the use of campaign funds for security expenses for both candidates and officeholders, and none suggested that a distinction should be made between the two.

The Commission agrees. As is well documented in the comments and in prior advisory opinions discussed above, both federal candidates and officeholders face safety and security threats due to running campaigns or holding federal office. Accordingly, the Commission adopts the proposed rule authorizing the use of campaign funds for certain security measures by both candidates and officeholders.

As proposed in the NPRM, the new regulation would only permit the use of campaign funds to pay for security measures that address ongoing dangers or threats that would not exist irrespective of the individual's status or duties as a federal candidate or federal officeholder.

Most of the commenters generally supported the proposed rule without commenting on the ongoing dangers or threats limitation. Several commenters, however, questioned whether the ongoing dangers or threats language was appropriate. One commenter recommended expanding the rule to include “reasonably likely future threats or dangers, or past threats or dangers that may reoccur.”  26 Another commenter expressed concern that the proposed rule was too restrictive and recommended that the rule take into account the threat environment at the national, state, or local level, rather than just the circumstances of the individual. 27

Another commenter suggested that the proposed rule should focus on whether the expense for the security measure would exist irrespective of the individual's status or duties as a candidate or officeholder rather than requiring any specific danger or threat.

Two commenters argued that the rule should not require a showing of heightened threat environment for candidates and officeholders to spend campaign funds on security measures. One of the commenters specifically opposed requiring that a heightened threat environment be demonstrated prior to spending on security measures. The other commenter explained that many security measures are reasonable under any conditions and should be treated as ordinary and necessary expenses, while the nature of any threat environment should be a consideration in the reasonableness test in the proposed rule language.

The Commission agrees with the comments that supported adopting the proposed rule and does not find the need to change the “ongoing dangers or threats” limitation. The Commission determines that the proposed rule as drafted appropriately encompasses the scope of dangers or threats faced by candidates and officeholders while establishing a limit to prevent the abuse and personal use of campaign funds. The Commission also agrees that a showing of a heightened threat environment should not be required prior to spending of campaign funds on security measures. Therefore, the Commission adopts the rule as proposed in the NPRM regarding ongoing dangers or threats.

In the NPRM, the Commission's proposed rule did not explicitly provide for the use of campaign funds for security measures for family members or staff of federal candidates and officeholders. The Commission, however, sought comment on whether the proposed rule should be expanded to cover family members and staff.

Most of the commenters generally supported adopting the proposed rule without commenting on whether family members and staff should be explicitly covered. Four comments specifically supported it, while none opposed it. Various commenters cited to media coverage of incidents of threats and violence faced by the family members and staff of candidates and officeholders, including the attack on the husband of former House Speaker Nancy Pelosi and a death threat received by a Congressional staff member. 28 One of the comments supporting the inclusion of family members and staff argued that such expenses should be specifically included because the need for the security expenses for family members and staff would not exist irrespective of the status of the individual as a candidate or officeholder. One comment suggested that the final rule should specify that “family” may include family members who do not reside with the candidate or officeholder; another comment recommended covering, at a minimum, the immediate family members who reside with the officeholder or candidate.

The Commission agrees that the proposed rule should be extended to permit the use of campaign funds for security measures for the family and staff of candidates and officeholders, in addition to the candidates and officeholders themselves. The Commission acknowledges the concerns raised by the commenters that the safety and security threats faced by candidates and officeholders may also extend to their families and staff, and in prior advisory opinions the Commission has authorized the use of campaign funds to address such security concerns. 29 The Commission also agrees that, as with threats to candidates and officeholders themselves, in such cases, those threats to family members and staff would not exist irrespective of the individual's status or duties as a federal candidate or federal officeholder.

The Commission therefore amends the proposed rule to permit the use of campaign funds for reasonable security measures to address ongoing dangers or threats to candidates and officeholders as well as members of the candidate or officeholder's family and staff. The Commission emphasizes that, as with candidates and officeholders, a security expense for a member of the candidate or officeholder's family or staff must satisfy the irrespective test, meaning that expenditures on such security measures could only be made if the threats to the family member or staff did not exist irrespective of the individual's status or duties as a candidate or officeholder.

Regarding the scope of the term “family member,” for purposes of this provision, the Commission will use the existing definition of “members of the candidate's family” in 11 CFR 113.1(g)(8). For this section, the term “employee” is used as defined at 26 CFR 31.3401(c)-1, as that is a well-recognized definition used elsewhere in Commission regulations, such as in 11 CFR part 114. This definition generally does not include campaign volunteers. 30 However, candidates or officeholders may request advisory opinions in circumstances where they seek to use campaign funds for such security measures.

In sum, the Commission adopts the new rule as amended to permit the use of campaign funds to pay for security measures for federal candidates, officeholders, and their family and staff.

The proposed rule did not require law enforcement involvement or assessment in permitting the use of campaign funds to pay for security measures for federal candidates and officeholders. However, the Commission sought comment on whether such a law enforcement requirement would be appropriate.

Most of the comments generally supported adopting the proposed rule without specifically commenting on whether law enforcement threat assessments should be required. Although various comments acknowledged that law enforcement assessments may play a useful role in demonstrating the existence of threats to candidates and officeholders, three comments opposed requiring them. One comment recommended that a police report be required if the campaign wished to spend above a certain limit established by the Commission. Another comment explained that although law enforcement assessment of a candidate or officeholder's circumstances and any security recommendations will be relevant to the determination of whether security expenses are reasonable, as was the case in prior Commission advisory opinions, the Commission never suggested that a law enforcement threat assessment was required to permit spending of campaign funds on security expenses.

After considering the arguments for and against requiring law enforcement threat assessments, the Commission has decided not to impose such a requirement in the final rule. As many commenters have noted, law enforcement threat assessments may play a useful role in determining whether a particular security measure is reasonable, and the Commission encourages candidates and officeholders to obtain such assessments when possible. However, imposing such a requirement in the regulation would be too restrictive, as it would deny the use of campaign funds for security measures in the absence of a law enforcement threat assessment even when an actual threat is genuine. Accordingly, the Commission adopts the rule as proposed in the NPRM, which does not require candidates or officeholders to obtain a law enforcement threat assessment to spend campaign funds on security measures.

In the NPRM, the proposed rule did not address the ownership of tangible security devices, such as security cameras installed on a candidate's property. One comment argued that the final rule should treat security devices purchased with campaign funds as the property of the candidate's principal campaign committee, citing to Advisory Opinion 1994-20 (Charlie Rose). The comment asserted that tangible security items should remain the campaign's property and be sold at fair market value or otherwise disposed of when the campaign winds down. The Commission disagrees with this comment because the ownership of tangible goods including those purchased for security measures remain subject to other provisions of the Act and Commission regulations, including prior advisory opinions that have treated non-cash assets as excess campaign funds. Accordingly, the Commission adopts the proposed rule without the amendment to address the ownership of tangible goods.

Several commenters urged the Commission to ensure campaign funds for security measures are not used for personal enrichment, especially when security measures or services are provided by candidates' family members. The Commission agrees with these comments that raised concerns about personal enrichment and potential abuse of campaign funds but finds that the proposed rule language, along with the other provisions of the Act and regulations, sufficiently addresses these concerns. The Commission therefore adopts the rule language as proposed.

Finally, one comment urged the Commission to explicitly acknowledge that even if campaign funds may be used for security expenses, campaigns are not required to pay for security expenses at the homes of candidates, officeholders, or their families, and such expenses can be paid for by candidates, officeholders, or their family members. The Commission declines to adopt this recommendation because it views it as unnecessary.

In the NPRM, the Commission proposed to treat non-structural security devices as a permissible category of security measures that candidates and officeholders could pay for using campaign funds. As proposed, 11 CFR 113.1(g)(10)(i) also provides several examples of permissible non-structural security devices, namely security hardware, locks, alarm systems, motion detectors, and security cameras.

Commenters generally supported adopting this provision. One comment, however, suggested adding “security training” to the list of examples of permissible non-structural security devices.

The Commission declines to do so. As acknowledged by the commenter, “training” is not a security measure that would generally be categorized as a device. Accordingly, consistent with the comments that support adopting the proposed rule, the Commission is adopting new 11 CFR 113.1(g)(10)(i) as proposed in the NPRM.

In the NPRM, the Commission proposed to treat structural security devices as permissible security measures that candidates and officeholders may pay for with campaign funds. The proposed subparagraph also listed several examples of permissible structural security devices, including wiring, lighting, gates, doors, and fencing. The proposed rule, however, required such devices to be “intended solely to provide security and not to improve the property or increase its value.”

The commenters generally supported adopting this provision. One comment recommended that the rule not require structural security devices to be intended “solely” to provide security. Another comment recommended allowing structural security devices at locations such as campaign headquarters, event spaces, and residences of staff and family members who received threats arising from their connection with the candidate or officeholder and not limiting the permissible use of such security devices to the candidate or officeholder's residence. This comment also recommended clarifying that incidental increases in value to a property from structural security devices do not necessarily make the use of campaign funds an impermissible personal use. However, the comment noted that additional costs for features or aesthetic options that do not serve a security purpose should not be permissible expenses to be paid using campaign funds.

The Commission declines to adopt a rule that would allow the installation of structural security devices for reasons other than security. In the Commission's view, the proposed rule appropriately restricts expenses to those that are solely intended to provide security. Expenses for structural security devices incurred for purposes other than security, such as to improve the property or increase property values, do not fall within the authority of this rule and may constitute the prohibited personal use of campaign funds. However, the Commission agrees that, as noted by another commenter, incidental increases in property value due to the installation of a device solely intended to provide security would be permissible. After considering all of the comments, the Commission is adopting new 11 CFR 113.1(g)(10)(ii) as proposed in the NPRM.

In the NPRM, the Commission proposed to treat professional security personnel and services as a category of security measures for which candidates and officeholders may use campaign funds.

The Commission received several comments on this proposed rule. One comment urged the Commission to provide strict guidance as to who constitutes professional security personnel under the proposed rule so that private militias would not be hired in the guise of security measures. Another comment recommended that the professional security personnel and services be limited to only bona fide, legitimate, professional security personnel as articulated in Advisory Opinion 2021-03 (NRSC, et. al). Two comments argued that security personnel paid for with campaign funds must be licensed by a government entity and be up to date on all required certifications to prevent untrained personnel from providing candidate and officeholder security. Two other comments stated that spending on professional security personnel should not be limited to candidates or officeholders who are not otherwise protected by law enforcement or federal agents. And one comment would require security firms to have no connection with candidates or their staff to avoid unjust enrichment by them.

The Commission agrees that additional guidance would be helpful in determining what are permissible security personnel and services under this rule. As identified by one of the commenters, limiting the rule to security personnel and services that are bona fide, legitimate, and professional would be consistent with the limitation the Commission previously approved in Advisory Opinion 2021-03 (NRSC, et. al). Adopting this proposed limitation would also address various concerns raised by commenters regarding the hiring of private militias, use of untrained personnel, and unjust enrichment under the pretext of security expenses. Therefore, the Commission adopts the proposed rule language as amended to require security personnel and services be bona fide, legitimate, and professional.

In the NPRM, the Commission proposed to treat cybersecurity software, devices, and services as a category of security expenses for which candidates and officeholders may use campaign funds.

The comments received in response to the NPRM generally agreed with treating cybersecurity protection measures as a permissible type of security measure in the new rule. One comment specifically expressed support for identifying cybersecurity measures in the new rule. None of the comments received opposed including cybersecurity measures in the new rule. Accordingly, the Commission adopts new 11 CFR 113.1(g)(10)(iv) as proposed in the NPRM.

The Commission certifies that the proposed rule, if adopted, would not have a significant economic impact on a substantial number of small entities. The proposed rule would provide flexibility to principal campaign committees that choose to use campaign funds to pay for security measures for federal candidates or officeholders. Any proposed rule that could be construed as placing an obligation on a principal campaign committee would apply only to campaigns that choose to pay for security measures for federal candidates or officeholders. The proposed rule would not impose any new recordkeeping, reporting, or financial obligations on principal campaign committees that do not choose to pay for security measures for federal candidates or officeholders, and any such new obligations that may be imposed on principal campaign committees that do choose to pay for such security measures would be minimal. Thus, to the extent that any entities affected by this proposed rule might fall within the definition of “small businesses” or “small organizations,” the economic impact of complying with this rule would not be significant.

For the reasons set out in the preamble, the Federal Election Commission amends 11 CFR part 113 as follows:

I. Background

The Bank Merger Act (BMA), section 18(c) of the Federal Deposit Insurance Act (12 U.S.C. 1828(c)), and the OCC's implementing regulation, 12 CFR 5.33, govern the OCC's review of business combinations of national banks and Federal savings associations with other insured depository institutions (institutions) that result in a national bank or Federal savings association. 1 Under the BMA, the OCC must consider the following factors: competition, the financial and managerial resources and future prospects of the existing and proposed institutions, the convenience and needs of the community to be served, the risk to the stability of the United States banking or financial system, and the effectiveness of any insured depository institution involved in combatting money laundering activities, including in overseas branches. 2 The BMA generally requires public notice of the transaction to be published for 30 days. 3 OCC regulations require the public notice include essential details about the transaction and instructions for public comment. The regulations incorporate the statutory 30-day public notice period and provide a 30-day public comment period, which the OCC may extend. 4 The OCC may also hold a public hearing, public meeting, or private meeting on an application. 5

The OCC has issued several publications that provide additional information about the procedures that the OCC follows in reviewing and acting on proposed business combinations. For example, the “Business Combinations” booklet of the Comptroller's Licensing Manual details the OCC's review of applications under the BMA. The “Public Notice and Comments” booklet of the Comptroller's Licensing Manual sets forth policies related to the public notice and comment process, including hearings and meetings. The Comptroller's Licensing Manual provides OCC staff, institutions, and the public with information about the procedures applicable to corporate applications filed with the OCC.

After reviewing these materials, the OCC determined that additional transparency about the standards and procedures that the agency applies when reviewing bank business combinations may be helpful to institutions and the public.

To better reflect the OCC's view that a business combination is a significant corporate transaction, the OCC proposed amendments to 12 CFR 5.33 to remove provisions related to expedited review and the use of streamlined applications. 6 The OCC also proposed adding a policy statement at appendix A to 12 CFR part 5, subpart C, that would discuss both the general principles the agency uses to review applications under the BMA and how it considers financial stability, financial and managerial resources and future prospects, and convenience and needs factors. Proposed appendix A also described the criteria informing the OCC's decision on whether to hold a public meeting on an application subject to the BMA.

The OCC received 34 substantive written comments on this proposal from banks, trade groups, academics, and members of the public. Most commenters agreed that the OCC should update its merger regulations and guidelines, but expressed varying views on the proposed changes. The comments are addressed below with the relevant discussion of 12 CFR 5.33 and appendix A. After careful consideration of these comments, the OCC is adopting its proposed amendments to 12 CFR 5.33 in final form and making minor, clarifying modifications to proposed appendix A.

The OCC proposed two substantive changes to its business combination regulation at 12 CFR 5.33. First, the OCC proposed removing the expedited review procedures in § 5.33(i). Paragraph (i) currently provides that a filing that qualifies either as a business reorganization as defined in § 5.33(d)(3) or for a streamlined application under § 5.33(j) is deemed approved as of the 15th day after the close of the comment period, unless the OCC notifies the applicant that the filing is not eligible for expedited review or the expedited review process is extended under § 5.13(a)(2). 7

Some commenters opposed eliminating the expedited review procedures. These commenters argued that eliminating the expedited review procedures would unnecessarily increase the complexity and cost of the application process for categories of transactions that are unlikely to present issues under the BMA, such as reorganizations. Further, many commenters expressed concern that removing § 5.33(i) would increase the burden on smaller institutions, including community banks. Some of these commenters suggested that the OCC continue to allow expedited processing for banks under a certain size. Other commenters supported eliminating expedited review, stating that eliminating the possibility that an application will be deemed approved solely due to the passage of time is necessary to address the systemic risks posed by large banks and the harms of consolidation. Further, some commenters that supported eliminating expedited review noted that the current expedited review process fails to adequately prevent anti-competitive mergers and the proposed changes to the review process would allow for a more comprehensive evaluation of merger application. Nevertheless, some supportive commenters noted that the proposed changes, including the removal of expedited review, do not go far enough to effectively address the issues raised by large bank consolidations.

The OCC reviews business combination applications to determine whether applicable procedural  8 and substantive  9 requirements are met. The only benefit conferred by the expedited review provisions in § 5.33(i) is that these applications are deemed approved as of the 15th day after the close of the comment period  10 unless the OCC takes action to remove the application from expedited review or extends the expedited review process. As described in the OCC's Annual Report, Licensing Activity section, the OCC's current target time frame for licensing decisions on merger applications is 45 days for expedited review and 60 days for standard review. 11 However, as noted in § 5.33(i), the OCC can remove an application from expedited review. Additionally, as noted in the OCC's Annual Report, the OCC may extend the standard review target time frame if it needs additional information to reach a decision, process a group of related filings as a single transaction, or extend the public comment period. The OCC's practice has been to approve or deny an application on expedited review within 15 days after the close of the comment period or remove the application from expedited review. The OCC is not aware of any application for a business combination having been deemed approved solely due to the passage of time. Accordingly, the OCC does not expect that removing this provision will result in a significant change to the time in which the OCC processes merger applications. Instead, this change will more closely align the regulatory framework with the OCC's current practices and promote transparency. Further, it is consistent with the OCC's view that any business combination subject to a filing under § 5.33 is a significant corporate transaction requiring active OCC consideration and decisioning of the application. The principles underlying the expedited process in § 5.33(i) ( i.e., transactions with certain indicators are likely to satisfy the statutory factors, do not otherwise raise supervisory or regulatory concerns, and therefore can be processed more expeditiously) are reflected in section II of the final appendix A.

Second, the OCC proposed removing § 5.33(j), which specifies four situations in which an applicant may use the OCC's streamlined business combination application, rather than the Interagency Bank Merger Act Application. 12 The streamlined application requests information about topics similar to those addressed in Interagency Bank Merger Act Application, but the former only requires an applicant to provide detailed information if the applicant answers in the affirmative to any one of a series of yes or no questions.

Many commenters opposed eliminating the streamlined application. Commenters stated that it is easy to complete and generally more efficient. Commenters stated that its removal would lead to longer processing times and higher costs for applicants. Several commenters emphasized that eliminating the streamlined application would disproportionately affect smaller banks, which often have limited resources to devote to a more complex, administratively burdensome, and detailed application process. Commenters critical of eliminating the streamlined application focused on the increased burden of associated with the Interagency Bank Merger Act Application. On the other hand, some commenters supported removing the streamlined application, with one also supporting the adoption of a more robust interagency merger application that would include a question on community benefit agreements or commitments.

The OCC believes that the more complete record created with the Interagency Bank Merger Act Application provides the appropriate basis for the OCC to consider a business combination application. Further, the removal of the streamlined business combination form should not significantly increase the burden on applicants. Although the Interagency Bank Merger Act Application requires the submission of additional information with the initial application, in practice, the OCC often requests additional information from many applicants, including those that file a streamlined application. Eliminating the streamlined application may decrease the likelihood the OCC requests additional information from applicants, which slows down the agency's processing an application and increases the burden on applicants. Further, the OCC may tailor the information applicants must submit in the Interagency Bank Merger Act Application as appropriate to reduce the information that the applicant needs to provide. 13 For example, there may be situations where a discussion of all items in the Interagency Bank Merger Act Application may not be appropriate, such as in a purchase and assumption transaction from an insured depository institution in Federal Deposit Insurance Corporation receivership.

Additionally, the U.S. Small Business Administration's (SBA's) Office of Advocacy and one other commenter stated that the OCC's Regulatory Flexibility Act (RFA) certification in the proposal lacked a factual basis. The SBA's Office of Advocacy and others recommended that the OCC continue to allow small entities to have access to expedited review and use the streamlined application form. Specifically with respect to the RFA certification, the commenters stated it lacked sufficient information about (1) the number of small entities that would be impacted (because the OCC only estimated the number of entities that apply for business combinations in a given year and did not explain how many of those entities were small entities) and (2) the basis for its conclusion that the impact on affected institutions would be de minimis.

In response to these comments, the OCC has revised the number of small entities that will be impacted by this rulemaking. (This change is reflected in its discussion of the RFA below.) Further, as discussed above, the OCC's process for reviewing business combination applications allows the agency to vary the information that applicants must submit on a case-by-case basis and to request additional information not required on the initial application, if necessary. The OCC also may remove an application from expedited review if it needs additional review time. Accordingly, the OCC expects these changes will have a de minimis impact on small entities.

For the reasons discussed above, the final rule removes § 5.33(i) and (j) as proposed. Further, because the term “business reorganization,” as defined in § 5.33(d)(3), is only used to define a class of applications eligible for expedited review under § 5.33(i), the final rule also removes § 5.33(d)(3).

As discussed in Section I, Introduction, of proposed appendix A, the policy statement would have provided institutions and the public with a better understanding of how the OCC reviews applications subject to the BMA and thus provided greater transparency, facilitate interagency coordination, and enhance public engagement. Specifically, proposed appendix A would have outlined the general principles the OCC applies when reviewing applications and provided information about how the OCC considers the BMA statutory factors of financial stability, financial and managerial resources, and convenience and needs of the community. 14 Proposed appendix A would have provided transparency regarding the public comment period and the factors the OCC considers in determining whether to hold public meetings.

Commenters generally supported the OCC's goals of increasing transparency; however, some commenters stated that by merely codifying current practices, the proposed appendix A did not go far enough in fulfilling the OCC's statutory obligations in reviewing bank mergers or preventing anti-competitive mergers in the banking industry. Several commenters also urged the OCC to coordinate closely with other regulators, such as the Federal Deposit Insurance Corporation, in finalizing the proposed policy statement and in updating the 1995 interagency document, Bank Merger Competitive Review—Introduction and Overview.

Other commenters suggested that appendix A should address the uncertainty surrounding the processing considerations and timelines of the OCC's review of BMA applications, noting that uncertainty in the timelines for regulatory approval could deter beneficial merger transactions. Several commenters offered additional ways to increase transparency, including by releasing some of the confidential supervisory information ( e.g., ratings) that the OCC uses in evaluating the statutory factors, televising live coverage of internal OCC deliberations, making all agency requests for additional information and bank responses public, and responding to all comments raised by the public in merger approval orders.

Several commenters suggested topics that the OCC should add to proposed appendix A. For example, several commenters suggested appendix A should provide details of the OCC's analysis of the BMA statutory factor of competition, generally and particularly with regard to how improvements in convenience and needs can outweigh anticompetitive effects. These commenters provided several suggested approaches. Other commenters urged the OCC to be more transparent when an applicant withdraws an application. One commenter also suggested the OCC take steps to reduce “charter shopping.” Another commenter urged the OCC to avoid the use of non-standard conditions to approve problematic mergers. Some commenters expressed concerns with the OCC's practice of holding prefiling meetings described in the Explanatory Calls or Meetings section of the “Business Combinations” booklet of the Comptroller's Licensing Manual and were concerned that such communications could unduly influence the agency. Suggestions to resolve this issue included automatically making transcripts or summaries of the calls or meetings public or ending the practice of holding the meetings.

The OCC is finalizing appendix A generally as proposed, with minor grammatical changes, except as noted below. The OCC intends for appendix A to provide substantive information on how it evaluates many of the BMA's statutory factors. Given complexities of the competition factor review and the involvement of the Department of Justice, the OCC does not believe that appendix A is the appropriate vehicle for discussing its current approach to competition issues. 15 The OCC's existing regulations govern the standards for impositions of conditions. 16 Similarly, the OCC does not intend appendix A to address OCC processing issues such as the disclosure of confidential supervisory information, the reasons for withdrawal of applications, its internal decision-making process, or its practice of holding pre-filing meetings. Accordingly, the OCC is finalizing Section I, Introduction, as proposed, with minor grammatical changes.

Section II, General Principles of OCC Review, of proposed appendix A would have discussed the OCC's review of and action on an application. Although, the OCC aims to act promptly on all applications, proposed appendix A identified certain indicators that, in the OCC's experience, generally feature in applications that are consistent with approval. These indicators included: (i) attributes regarding the acquirer's financial condition; size; Uniform Financial Institution Ratings System (UFIRS)  17 or risk management, operational controls, compliance, and asset quality (ROCA)  18 ratings; Uniform Interagency Consumer Compliance Rating System (CC Rating System) rating; Community Reinvestment Act (CRA) rating; the effectiveness of its Bank Secrecy Act/anti-money laundering program; and the absence of fair lending concerns; (ii) attributes regarding the target's size and status as a eligible depository institution, as defined in § 5.3; (iii) the transaction clearly not having a significant adverse effect on competition; and (iv) the absence of significant CRA or consumer compliance concerns, as indicated in any comments or supervisory information.

The General Principles of OCC Review section of proposed appendix A would have also recognized that there are indicators that raise supervisory or regulatory concerns. Based on the OCC's experience, if any of these indicators are present, the OCC is unlikely to find the statutory factors under the BMA to be consistent with approval unless and until the applicant has adequately addressed or remediated the concern. Proposed appendix A would have stated that these indicators include: (i) the acquirer has a CRA rating of Needs to Improve or Substantial Noncompliance; (ii) the acquirer has a UFIRS or ROCA composite or management rating of 3 or worse; (iii) the acquirer has a consumer compliance rating of 3 or worse; (iv) the acquirer is a global systemically important banking organization (G-SIB), or subsidiary thereof;  19 (v) the acquirer has an open or pending Bank Secrecy Act/Anti-Money Laundering enforcement or fair lending action, including referrals or notification to other agencies;  20 (v) failure by the acquirer to adopt, implement, and adhere to all the corrective actions required by a formal enforcement action in a timely manner; and (vi) multiple enforcement actions against the acquirer executed or outstanding during a three-year period.

Commenters expressed confusion about how these indicators apply and how the OCC's reviews applications that meet some, but not all, of the indicators that generally feature in applications consistent with approval. For example, numerous commenters interpreted the proposed policy statement as indicating that the OCC would not approve an application if one of the first set of indicators was absent. Commenters also requested clarification about how an absence or resolution of any or most of the listed indicators of supervisory or regulatory concerns would expedite a positive decision on an application.

The OCC understands the confusion of some commenters with respect to appendix A as proposed. In addition to the two categories of transactions recognized in proposed section II, there is a middle category of transactions that do not feature all of the indicators in the first category but also have none of the indicators that raise supervisory or regulatory concerns. The OCC believes that most transactions will be in this middle category and that many of these transactions are likely consistent with approval.

The OCC is revising proposed appendix A to eliminate this confusion and clarify the significance of the two types of indicators. The final appendix A includes prefatory text that notes that applications that feature all of the first set of indicators tend to be more likely to withstand scrutiny and to be approved expeditiously. In the OCC's experience, these indicators reflect a national bank or Federal savings association's condition or other features that the OCC is likely to quickly find consistent with approval. However, these indicators are not required for a transaction to be approved. For example, the OCC has approved many transactions where the target is not an eligible depository institution and the acquirer brings the appropriate financial and managerial resources to bear to mitigate deficiencies at the target.

With respect to the individual indicators, some commenters objected to $50 billion in total assets serving as a ceiling for transactions consistent with approval. One commenter requested that the OCC raise indicator to $100 billion or more in total assets. Another commenter noted that having $50 billion dollars as a threshold could prevent or make it more difficult for regional and midsized institutions to combine and compete with the largest banks. As clarified in final appendix A, the $50 billion indicator merely reflects the likelihood of an expeditious approval. The OCC recognizes that national banks and Federal savings associations with $50 billion or more in total assets tend to be more complex than smaller banks. For example, insured national banks and Federal savings associations with at least $50 billion in total assets are subject to the OCC Guidelines Establishing Heightened Standards for Certain Large Insured National Banks, Insured Federal Savings Associations, and Insured Federal Branches. In light of the increased complexity of these institutions, the OCC may require additional time for review of the application. The OCC believes that many transactions where the resulting institution will have total assets of more than $50 billion are consistent with approval. Accordingly, the OCC is finalizing the indicator as proposed at $50 billion or more in total assets, as clarified by a modification to the prefatory text to the indicators.

Two commenters expressed concern with the indicator focusing on transactions where the target's total assets are less than or equal to 50 percent of acquirer's total assets. The indicator is not intended to discourage mergers of equals. It was included because, in the OCC's supervisory experience, mergers between institutions of similar sizes are likely to require more review than transactions where the target is much smaller than the acquirer. In transactions with significant size disparities, the acquirer is more likely to use its existing policies, procedures, and control framework, with which the OCC is already familiar. Integration of two similarly sized institutions is more likely to result in more changes to resulting institution, which the OCC will need to review for consistency with the applicable BMA factors. The inclusion of this indicator simply highlights that applications for mergers between institutions that are similar in size may require additional time to assess but does not indicate that those applications will not be approved. The OCC is, however, deleting the word “combined” referring to the target's total assets in this indicator for clarity. The OCC is thus finalizing this indicator as proposed, as clarified by a modification of the prefatory text to the indicators which emphasizes that the first set of indicators are intended to identify applications that are more likely to withstand scrutiny and to be approved expeditiously.

Commenters also asserted that the proposed indicators regarding lack of enforcement actions, lack of fair lending concerns, clear absence of a “significant adverse effect” on competition, and no adverse public comments are inconsistent with the applicable standards under the BMA. Other commenters supported these indicators but had additional suggestions including urging the OCC to include language about coordinating with the Consumer Financial Protection Bureau regarding fair lending and consumer protection matters; barring applicants with records of noncompliance with fair lending, CRA, and other consumer protection laws from being acquired; and requiring merging parties to undergo new fair lending and CRA reviews under heightened scrutiny. The OCC does not require that all of these indicators are present for a transaction to be consistent with the BMA's statutory factors. Rather, the OCC can more quickly find that applications with all of these indicators are consistent with the BMA factors and approve the transactions. For example, a merger between two institutions without an overlapping footprint and few products in common will require less analysis with respect to competition compared to a merger between institutions with significant overlap. Similarly, the OCC approves mergers on which the public has commented after reviewing all comments. The OCC recognizes that while comments play an important role in the review process, some comments may fail to raise a significant supervisory, CRA, or compliance concern. 21 The OCC does not expect such comments, on their own, to warrant less expeditious processing of the application. Therefore, OCC is finalizing these indicators as proposed, as clarified by a modification of the prefatory language to the indicators.

With respect to the indicators of supervisory or regulatory concern, commenters expressed concern with any indication in the proposed appendix A that the acquirer is a G-SIB or subsidiary thereof would be unlikely to be consistent with approval. Some commenters noted that the indicator could restrict internal reorganizations by a G-SIB and its subsidiaries. Additionally, two commenters noted that Congress has already addressed large-bank concentration by prohibiting bank acquisitions based on deposit concentrations and that the OCC's use of the G-SIB designation was inconsistent with Congressional intent. Other commenters expressed concern that the indicator could be interpreted to include proposed business combinations involving U.S.-based bank subsidiaries of non-U.S. G-SIBs. These commenters assert that applications for combinations involving such entities could bring diversity to the U.S. banking system. On the other hand, another commenter supported increased scrutiny of transactions involving G-SIBs but asserted that transactions undertaken by large, non-G-SIBs should also trigger enhanced scrutiny.

The indicators of regulatory or supervisory concern do not preclude OCC approval of a BMA application by an institution that exhibits one or more of the indicators. For example, internal corporate reorganizations are frequently consistent with the BMA, notwithstanding many regulatory or supervisory concerns, particularly where the transaction enhances the resolvability of the institution. The OCC views these factors regarding size as independent from limits that Congress established in the BMA and the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (Riegle-Neal). 22 For certain interstate transactions, the BMA contains a national deposit cap, and Riegle-Neal has national and State deposit caps. 23 Similarly, there is a liability cap imposed by the Dodd-Frank Wall Street Reform and Consumer Protection Act  24 that applies to both holding companies and banks. 25 These are all limits that a bank may not exceed absent a specific statutory exception. In contrast, the G-SIB indicator in the proposal reflects the OCC's supervisory experience with organizations of that size and the impact of size and complexity on the review of a business combination.

Similarly, even though the U.S. operations of a foreign-based G-SIB may be smaller than those of domestic G-SIBs, the potential for supervisory issues remains high, particularly if the foreign G-SIB's U.S. operations are material. G-SIBs are among the most complex financial institutions and, in the OCC's supervisory experience, they often present supervisory issues such that inclusion of this indicator is warranted. The OCC recognizes, however, that G-SIB status is unlikely to be remediated. While the OCC continues to believe that the G-SIB indicator is appropriate, it will evaluate all applications from foreign and domestic G-SIBs on their individual merits and undertake a fulsome analysis under the BMA and other applicable law.

Another commenter noted that a less than “Satisfactory” CRA rating should not preclude an internal reorganization that would simplify the banking organization and make it safer and sounder. Congress has mandated that the OCC consider an institution's CRA rating when acting on any BMA application. 26 The OCC recognizes that internal reorganizations present facts and analysis distinguishable from many other BMA applications, and while the inclusion of this indicator does not indicate those applications will not be approved, additional scrutiny may be warranted. In some instances, the benefits of a reorganization may overcome the less than “Satisfactory” CRA rating. Nevertheless, the OCC regards a less than “Satisfactory” CRA rating as raising significant regulatory or supervisory concerns and warranting inclusion on the list of indicators. One commenter also praised the inclusion of instances where an acquirer has experienced rapid growth as an indicator of supervisory or regulatory concern.

The OCC is making one change to the indicator regarding open enforcement actions. Proposed appendix A was specific to Bank Secrecy Act/Anti-money Laundering or fair lending actions, including referrals or notifications to other agencies. The OCC is including all types of consumer compliance enforcement actions in final appendix A to reflect the seriousness of these types of enforcement actions. Accordingly, the OCC is generally finalizing these indicators as proposed, as clarified by a modification to the prefatory language to the indicators and the addition of consumer compliance enforcement actions.

Section III, Financial Stability, of proposed appendix A would have provided additional information about how the OCC considers “the risk to the stability of the United States banking or financial system” as required by the BMA, including (i) the factors the OCC considers (which are currently described in the “Business Combinations” booklet of the Comptroller's Licensing Manual ); (ii) the balancing test that the OCC applies; and (iii) the OCC's ability to consider imposing conditions on the approval of any such transaction. The OCC's approach to considering the risk to the stability of the financial system set forth in proposed appendix A is consistent with longstanding OCC practice and principles. 27 Specifically, the OCC considers (i) whether the size of the combined institutions would result in material increases in risk to financial stability; (ii) any potential reduction in the availability of substitute providers for the services offered by the combining institutions; (iii) whether the resulting institution would engage in any business activities or participate in markets in a manner that, in the event of financial distress of the resulting institution, would cause significant risks to other institutions; (iv) the extent to which the combining institutions contribute to the complexity of the financial system; (v) the extent of cross-border activities of the combining institutions; (vi) whether the proposed transaction would increase the relative degree of difficulty of resolving or winding up the resulting institution's business in the event of failure or insolvency; and (vii) any other factors that could indicate that the transaction poses a risk to the U.S. banking or financial system.

Section III, Financial Stability, of proposed appendix A would have clarified that the OCC applies a balancing test when considering the financial stability factor and weighs the financial stability risk of approving the proposed transaction against the financial stability risk of denying it, particularly if the proposed transaction involves a troubled target. Specifically, the OCC considers each factor individually and in combination. Even if only a single factor indicates a risk to the stability of the U.S. banking or financial system, the OCC may determine that the proposal would have an adverse effect on the stability of the U.S. banking or financial system. 28 The OCC also considers whether the proposed transaction would provide any stability benefits and the enhanced prudential standards that would be applicable as a result of the proposed transaction would offset any potential risks. 29

Section III also would have noted that, consistent with current OCC practice, 30 the OCC's review of the financial stability factors may result in a decision to approve a proposed transaction, subject to conditions that are enforceable under 12 U.S.C. 1818. These conditions may include asset divestitures or higher minimum capital requirements and are intended to address and mitigate financial stability risk concerns.

Further, the OCC's review of the financial stability factors considers the impact of the proposed transaction in the context of any heightened standards applicable to the resulting institution pursuant to 12 CFR part 30, appendix D, “OCC Guidelines Establishing Heightened Standards for Certain Large Insured National Banks, Insured Federal Savings Associations, and Insured Federal Branches” and the recovery planning standards applicable to the resulting institution pursuant to 12 CFR part 30, appendix E, “OCC Guidelines Establishing Standards for Recovery Planning by Certain Large Insured National Banks, Insured Federal Savings Associations, and Insured Federal Branches.” Section III also would have stated that the OCC may consider the facts, circumstances, and representations of concurrent applications for related transactions, including the impact of the related transactions on the proposed transaction. 31

Commenters generally supported the OCC's goal of providing additional transparency about how the OCC considers the effect of a transaction on financial stability. However, some commenters criticized the OCC's balancing test approach to evaluating financial stability as too lenient to protect financial institutions and the broader economy, especially for G-SIBs. These commenters noted that the OCC should not rely on enhanced prudential standards to offset risks. One commenter also objected to the OCC's consideration of the financial stability risk associated with denying an application in the balancing test and noted that the OCC should use the supervisory process and not business combinations to address concerns about troubled institutions. Some commenters suggested options including other, scored risk factors like the list of systemic risk factors used to calculate the G-SIB surcharge in 12 CFR part 217, subpart H. Additionally, commenters expressed concern that the OCC's review would consider the representations made in other pending applications and noted that applicants may not have detailed knowledge of pending or future applications. Another commenter suggested that the OCC revise proposed appendix A to promote more actively the acquisition of a troubled institution before it fails. One commenter suggested automatically categorizing transactions involving institutions below $10 billion in assets as low risk to financial stability unless specific factors suggest otherwise. Other commenters suggested that considerations of financial stability risks under the BMA must include an evaluation of climate-related financial risks and the impact of a resulting institution's activities on financial stability in that regard.

The proposed appendix A described the OCC's long-standing approach to considering the risk to the stability of the financial system and would have provided additional clarity on the factors considered, the balancing test applied, and the possibility that the OCC may impose conditions in certain situations. Although the OCC's considerations are not scored, the OCC considers each factor individually and in combination to develop a holistic view of the potential transaction's effect on financial stability. The OCC believes this balancing test allows it to consider all factors relevant to financial stability and results in determinations that fully incorporate the effect of the transaction on financial stability. Additionally, the OCC's review would have only considered the representations of other concurrent applications for related transactions, not unrelated applications that have no nexus to the application under consideration.

The OCC is removing the word “requirements” from the discussion of the OCC's consideration of the impact of the proposed transaction in light of the standards applicable to the resulting institution's recovery planning in Section III, Financial Stability, to more accurately describe the standards in 12 CFR part 30, appendix E, “OCC Guidelines Establishing Standards for Recovery Planning by Certain Large Insured National Banks, Insured Federal Savings Associations, and Insured Federal Branches”. The OCC is otherwise generally finalizing Section III, Financial Stability, as proposed.

Section IV, Financial and Managerial Resources and Future Prospects, of proposed appendix A would have discussed the BMA's requirement that the OCC consider the managerial resources, financial resources, and future prospects of any proposed transaction. Under the BMA, the OCC must consider each of these factors independently for both the combining and resulting institutions. 32 However, because these factors are directly related to one another, the OCC also considers these factors holistically. This section of proposed appendix A would have described the overarching considerations of the OCC's review of these factors and provide additional details about what the OCC considers while reviewing these factors. The overarching considerations of this proposed section would have noted that the OCC would consider the size, complexity, and risk profile of the combining and resulting institutions.

Further, proposed appendix A would have expanded the discussion in the Comptroller's Licensing Manual about the types of transactions the OCC would normally not approve to provide additional details about acquirer characteristics with respect to financial and managerial resources and future prospects that are less likely to result in an approval. Specifically, the OCC is less likely to approve an application when the acquirer (i) has a less than satisfactory supervisory record, including its financial and managerial resources; (ii) has experienced rapid growth; (iii) has engaged in multiple acquisitions with overlapping integration periods; (iv) has failed to comply with conditions imposed in prior OCC licensing decisions; or (v) is functionally the target in the transaction. 33 The OCC also normally does not approve a combination that would result in a depository institution with less than adequate capital, less than satisfactory management, or poor earnings prospects.

Finally, this subsection would have confirmed the OCC's practice of considering all comments on proposed transactions, including those on financial and managerial resources and future prospects. To the extent public comments address issues involving confidential supervisory information, however, the OCC generally would not discuss or otherwise disclose confidential supervisory information in public decision letters.

Section IV of proposed appendix A would have next discussed the OCC's consideration of the financial resources, managerial resources, and future prospects factors. With respect to financial resources, proposed appendix A would have discussed the OCC's review of pro forma capital levels. Additionally, the OCC is generally prohibited by statute from approving business combination applications filed by an institution that is undercapitalized as defined in 12 CFR 6.4. 34 Proposed appendix A also would have specified that the OCC closely scrutinizes transactions that increase the risk to the bank's financial condition and resilience, including risk to the bank's capital, liquidity, and earnings that can arise from any of the eight categories of risk included in the OCC's Risk Assessment System. 35 Further, with respect to the financial resources factor, the OCC considers the ability of management to address increased risks that would result from the transaction. Finally, proposed appendix A would have clarified that a transaction involving an acquirer with a strong supervisory record is more likely to satisfy the review factors. By contrast, a transaction involving an acquirer with a recent less than satisfactory supervisory record is less likely to satisfy this factor.

Section IV of proposed appendix A would have also discussed the OCC's approach to the managerial resources standard. The OCC considers the supervisory record and current condition of both the acquirer and target to determine if the resulting institutions will have sufficient managerial resources. For example, a significant number of matters requiring attention (MRA), or lack thereof, may impact the determination as to whether there are sufficient managerial resources. The OCC also reviews (i) both institutions' management ratings under the UFIRS or ROCA system, as well as their component ratings under the CC Rating System, Uniform Rating System for Information Technology, and Uniform Interagency Trust Rating System, as applicable; and (ii) relevant Risk Assessment System (RAS) conclusions for the applicant as well as the RAS conclusions for an OCC-supervised target. The OCC also considers the context in which the rating or RAS element was assigned and any additional information resulting from ongoing supervision. Finally, proposed appendix A would have noted that less than satisfactory ratings at the target do not preclude the approval of a transaction, provided that the acquirer can employ sufficiently robust risk management and financial resources to correct the weaknesses.

Proposed appendix A would have stated that the OCC considers whether the acquirer has conducted sufficient due diligence of the target depository institution to understand its business model, systems compatibility, and weaknesses. This consideration includes the acquirer's plans and ability to address its own previously identified weaknesses, remediate the target's weaknesses, and exercise appropriate risk management for the size, complexity, and risk profile of the resulting institution. Similarly, the OCC considers the acquirer's plans for and history of integrating combining institutions' operations, including systems and information security processes, products, services, employees, and cultures.

Proposed appendix A next would have discussed the OCC's consideration of the acquirer's plans to identify and manage systems compatibility and integration issues, such as information technology compatibility and implications for business continuity and resilience. A critical component of these plans includes identifying overreliance on manual controls, strategies for automating critical processes, and capacity and modernization of aging and legacy information technology systems. The OCC may conduct additional reviews where there are concerns with systems integration and, in some cases, the OCC may impose conditions that are enforceable pursuant to 12 U.S.C. 1818 to address those concerns. The OCC may deny an application if the integration or other issues present significant supervisory concerns, and the issues cannot be resolved through appropriate conditions or otherwise. 36

Finally, with regard to managerial resources, proposed appendix A would have described the OCC's consideration of the proposed governance structure of the resulting institution. This includes consideration of (i) governance in decision-making processes, the board management oversight structure, and the risk management system, including change management; and (ii) the expansion of existing activities, introduction of new or more complex products or lines of business, and implications for managing existing and acquired subsidiaries and equity investments. When applicable, the resulting institution's governance is also considered in the context of the institution's relationship with its holding company and the scope of the holding company's activities.

Section IV of proposed appendix A also would have discussed how the OCC considers the future prospects factor. The OCC considers this factor in light of its assessment of the institutions' financial and managerial resources. The OCC also considers the proposed operations of the resulting institutions and the acquirer's record of integrating acquisitions. Specifically, the OCC considers whether the integrated institution will be able to function effectively as a single entity. The OCC also considers the resulting institution's business plan or strategy and management's ability to implement it in a safe and sound manner. Finally, the OCC considers the combination's potential impacts on the resulting institution's continuity planning and operational resilience.

One commenter highlighted the importance of assessing managerial resources and firm culture when considering an application under the BMA. This commenter urged the OCC to make it clear that, when considering the managerial resources factor, the OCC would take into consideration whether the acquirer and target have implemented governance solutions that generate outcomes that meet or exceed the OCC's expectations and suggested using artificial intelligence and machine learning tools to do so. Other commenters suggested that an assessment of financial and managerial resources and future prospects should include climate-related financial risk expertise. Several other commenters suggested the OCC include a requirement that banks describe their efforts to promote gender, racial, and ethnic diversity in their boards, senior management, and branch personnel, with some commenters suggesting that such information be considered under the managerial resources factor. One commenter also suggested that applicants submit an integration plan as part of their application. Given the varied nature of institutions' operations and proposed mergers, the OCC is declining to require these items as part of its review of all applications under the BMA. To the extent that it is relevant to any particular transaction, the OCC may, based on its supervisory expertise, request information on these or other items that are relevant to the financial and managerial and future prospects factors.

The OCC is thus generally finalizing section IV as proposed with one addition to make explicit a consideration that was implicit in the proposal. The OCC is adding a new overarching consideration in section IV of appendix A. Specifically, section IV will state that the OCC considers the financial and managerial resources and future prospects factors within the context of the prevailing economic and operating environment. The OCC recognizes that the financial resources and future prospects of institutions, and those of community institutions in particular, are likely to be highly dependent on the economic and other environments within which they operate. As such, a combined institution's financial resources and future prospects may in some cases be significantly greater than those of the individual institutions if no merger were to occur.

Section V of proposed appendix A would have expanded on the discussion in the Comptroller's Licensing Handbook of the OCC's consideration of the probable effects of the proposed business combination on the community to be served. Specifically, this section would have clarified that the OCC's consideration of the impacts of any proposed combination on the convenience and needs of the community is prospective and considers the likely impact on the community of the resulting institution after the transaction is consummated. 37 For this factor, the OCC considers, among other things (i) the proposed changes to branch locations, branching services, banking services or products, or credit availability offered by the target and acquirer, including in low- or moderate-income (LMI) communities; (ii) any job losses or lost job opportunities from branching changes; and (iii) any community investment or development initiatives, including particularly those that support affordable housing and small businesses. With respect to (i) above, the OCC also sought comment on whether to specify communities in addition to LMI communities as part of these considerations.

Finally, section V of proposed appendix A would have clarified that the OCC's forward-looking consideration of the convenience and needs factor under the BMA is separate and distinct from its consideration of an applicant's CRA record of performance in helping to meet the credit needs of the relevant community, including LMI neighborhoods.

Commenters expressed varying viewpoints on Section V, Convenience and Needs, of proposed appendix A. Some commenters criticized the OCC's inclusion of job losses or reduced job opportunities, and one commenter stated that such consideration lacked a statutory basis and diverged from longstanding regulatory precedent. Other commenters encouraged the OCC to place greater emphasis on factors such as potential job losses; projected branch losses in LMI and majority-minority census tracts; impacts to communities of color and underserved census tracts, including small businesses in those communities; reduced reinvestment; increased fees; and other factors that could affect access to banking services when evaluating the community and needs factor. One commenter suggested the OCC consider past bank branch closures. Another commenter recommended that the OCC require applicants to submit a list of branch closures planned for the three years following the consummation of a merger and a discussion of the impact on local communities and stated that applicants should be prohibited from closing other branches for three years. Some commenters suggested that a merger should not be approved unless applicants can demonstrate that the transaction will better meet the convenience and needs of the community, with several commenters specifically noting that the OCC should only approve transactions that better serve vulnerable communities, including low-income communities and communities of color. Several commenters suggested that the OCC's review of the convenience and needs factor should include broad consideration of the climate-related impact of the transaction, including financial risk, impacts resulting from bank activities that may impact climate change, and the climate related transition plans. One commenter suggested that the OCC should provide additional clarity on how it weighs the various impacts it considers. Other commenters noted that the OCC should specifically consider how the impacts of the expansion of digital banking affects underserved communities in the context of merger reviews.

Several commenters emphasized the importance of community benefit agreements and plans and collaboration with community groups and urged the OCC to use its policy statement to elevate the importance of these agreements, plans, and collaborations. Suggestions included signaling that the OCC would enforce community benefit commitments made during merger applications or imposing a condition of approval on the acquirer requiring it to adhere to the elements of such commitments. Another commenter requested additional transparency with respect to conditional approvals for convenience and needs, CRA, or fair lending concerns. 38

The OCC considers the convenience and needs factor in light of the specific facts of each transaction. The factors listed in proposed section V are indicators of whether the proposed transaction will enable the resulting institution to better meet the convenience and needs of its community. A net positive impact on its ability to meet the convenience and needs of community is, in the OCC's experience, generally consistent with approval with respect to this factor. Applicants need not make a showing with respect to any or all of these items for the application to be consistent with approval. The OCC agrees with commenters that the BMA does not require consideration of particular facts such as job losses with respect to the convenience and needs of the community. Consistent with the BMA, the OCC will evaluate the facts of each application and determine whether particular items are relevant to its consideration of convenience and needs of the specific community to be served. For example, job losses or reduced job opportunities may have an impact on the local community as a whole in certain circumstances. Additionally, the OCC will consider any plans regarding the availability or cost of banking services or products to the community in the context of the communities affected, including LMI communities. Based on its supervisory experience, including its review of business combination applications, the OCC believes that the existing information requirements in the Interagency Bank Merger Act Application provide the appropriate initial level of information. The OCC may request additional information regarding branch closures or other facts impacting the convenience and needs of the community to be served. Further, the OCC believes that the items listed in proposed section V are appropriately tailored to cover the full range of BMA applications it receives.

Another commenter suggested that unless material changes are expected post-consummation, the OCC should use the acquirer's and target's CRA ratings as the primary method of assessing a merger's impact on the convenience and needs of the community. Other commenters asserted that CRA alone is not sufficient for determining a merger's impact on the convenience and needs of the community. As discussed in the Business Combinations booklet of the Comptroller's Licensing Manual, a CRA rating is based on past performance, while the convenience and needs factor is prospective. 39 Accordingly, analysis of past CRA performance is not sufficient to analyze the prospective convenience and needs of the community. The OCC believes that section V correctly articulated this standard as proposed.

The OCC is making clarifying edits to section V of appendix A. The OCC is changing the order of the discussion of an institution's plans to close, consolidate, limit, or expand branches to have the activities in a more logical sequence. Likewise, with respect to credit availability, the OCC is specifying that it considers an institution's plans to maintain, reduce, or improvement credit availability, including access to specific types of loans. Accordingly, the OCC is finalizing section V generally as proposed.

Section VI, Public Comments and Meetings, of proposed appendix A would have provided additional details about the process and procedures relating to the OCC's receipt of public comments and considerations related to public meetings and clarified the information contained within 12 CFR part 5 and the “Public Notice and Comments” booklet of the Comptroller's Licensing Manual. 40 Specifically, the public comments subsection would have articulated the circumstances under which the OCC may extend the usual 30-day comment period  41 pursuant to § 5.10(b)(2). 42 It also would have provided additional clarity by noting that the OCC may find that additional time is necessary to develop factual information, and thus warrant extending the comment period. This could happen, for example, if a filer's response to a comment does not fully address the matters raised in the comment and the commenter requests an opportunity to respond. This subsection also would have provided examples of extenuating circumstances when the OCC may determine that an extension is needed, including if a public meeting is held, the transaction is novel or complex, or a natural disaster has occurred that affects the public's ability to timely submit comments.

With respect to the discussion of public comments, some commenters supported the proposal's discussion of how a comment period can be extended when a filer does not adequately respond to a commenter. However, other commenters expressed concern that the OCC's ability to extend the comment period based on the completeness of a filer's response to a comment may create a risk of commenters repeatedly filing comments in bad faith, which will result in delay. Two commenters suggested that the OCC consider extending the comment period in some instances, with one commenter suggesting that the OCC use an initial 60-day comment period for larger transactions. Other commenters also encouraged the OCC to minimize the negative impacts of prolonged review periods on affected communities and stakeholders. One commenter also requested that the OCC develop policies to address the abuse of the public comment process, including via the use of artificial intelligence.

The OCC did not propose any changes to its regulations regarding its acceptance and review of public comments, which are broadly applicable to transactions covered by 12 CFR part 5 and not only business combinations. The OCC periodically considers which of its regulations would benefit from proposed changes and will consider whether to propose changes to the public comment regulations at an appropriate time. 43 The OCC is mindful of the effects of the length of review periods on all relevant parties. The OCC uses the standard 30-day notice period prescribed by the BMA  44 and will extend the comment period pursuant to the factors discussed in section VI as appropriate. The OCC intends to act on applications in a timely fashion, consistent with a fulsome review of applications and safety and soundness. To clarify that the purpose of section VI is to address considerations regarding the public comment period and not the OCC's acceptance and review of public comments, the OCC is revising the headings in section VI to specifically reference the public comment period.

The proposed public meetings subsection of section VI would have stated that when determining whether to hold a public meeting, the OCC balances the public's interest in the transaction with the value or harm of a public meeting to the decision-making process. Proposed appendix A would also have clarified the criteria that inform the OCC's decision on whether to hold a public meeting. The criteria include (i) the public's interest in the transaction; (ii) the appropriateness of a public meeting to document or clarify issues raised during the public comment process; (iii) the significance of the transaction to the banking industry; (iv) the significance of the transaction to the communities affected; (v) the potential value of any information that could be gathered and documented during a public meeting; and (vi) the acquirer's and target's CRA, consumer compliance, fair lending, or other pertinent supervisory records, as applicable. Several commenters proposed additional triggers for holding public meetings, including when there is a significant overlap in branch networks, when CRA ratings are lower in affected geographies, when the resulting entity will exceed a certain asset size, or when there is a merger protest. These commenters also suggested several ways that the OCC could improve outreach to underserved communities and dialogue about the impact of potential mergers. These included adopting a public registry for CRA examinations and mergers, improving the format of public meetings, and providing clearer information on regulatory websites on how to engage with regulators on particular mergers. One commenter objected to what it characterized as the OCC's implication that input from the public could be harmful to the OCC's decision-making process. This commenter suggested a public meeting should be held when requested.

As discussed in proposed section VI, the OCC considers the significance of the transaction to the communities affected, as well as applicable CRA ratings. The OCC believes that these considerations are sufficiently broad to cover issues such as a significant overlap in branch networks. Further, the OCC believes that a decision to hold a public meeting should be based on the individual facts and circumstances of each proposed merger. For example, the considerations for whether to hold a public meeting on an internal corporate reorganization likely differ from those in a transaction between unaffiliated institutions. Additionally, the OCC believes that the fact that a comment is filed with respect to a proposed merger is insufficient alone to warrant a meeting. For example, through requests for additional information, the OCC can often obtain the information it needs to fully consider the comment without organizing a meeting. Consistent with applicable law, the OCC makes public all CRA performance evaluations on its website  45 and all applications under the BMA in its Freedom of Information Act Reading Room. 46 While the OCC may consider additional methods to provide information to the public it believes that this issue is outside the scope of appendix A. Similarly, 12 CFR 5.11(i) provides the OCC with broad discretion in the conduct of public meetings. The OCC may tailor the format and structure of public meetings as needed based on the specific circumstance. The OCC believes that the information contained in proposed section VI is appropriate for general consideration of public meetings. Accordingly, besides the revision to the headings in section VI to specifically reference the public comment period, the OCC is generally finalizing section VI as proposed.

Under the Paperwork Reduction Act of 1995 (PRA), 47 the OCC may not conduct or sponsor, and a respondent is not required to respond to, an information collection unless it displays a currently valid Office of Management and Budget (OMB) control number. The information collection requirements in this rule have been submitted to OMB under OMB control number 1557-0014 (Licensing Manual).

The final rule amends 12 CFR 5.33 by removing the expedited review procedures in § 5.33(i), which currently allow an application to be deemed approved by the OCC as of the 15th day after the close of the comment period, unless the OCC notifies the filer that the filing is not eligible for expedited review or the expedited review process is extended. The final rule also removes the streamlined application in § 5.33(j), which removes the ability of eligible institutions to file for certain types of business combinations using a streamlined application form.

Title: Licensing Manual.

OMB Control Number: 1557-0014.

Frequency of Response: Occasional.

Affected Public: National banks and Federal savings associations.

The changes to the burden of the Licensing Manual are de minis and continue to be:

Estimated Number of Respondents: 3,694.

Estimated Total Annual Burden: 12,481.15.

Comments continue to be invited on:

a. Whether the collections of information are necessary for the proper performance of the agency functions, including whether the information has practical utility;

b. The accuracy of the agency estimates of the burden of the information collections, including the validity of the methodology and assumptions used;

c. Ways to enhance the quality, utility, and clarity of the information to be collected;

d. Ways to minimize the burden of the information collections on respondents, including through the use of automated collection techniques or other forms of information technology; and

e. Estimates of capital or start-up costs and costs of operation, maintenance, and purchase of services to provide information.

All comments will become a matter of public record. Written comments and recommendations for the information collection should be sent within 30 days of publication of this notice. Comments on the collection of information should be sent to Chief Counsel's Office, Attention: Comment Processing, Office of the Comptroller of the Currency, Attention: 1557-0014, 400 7th Street SW, Suite 3E-218, Washington, DC 20219. Comments may also be sent to prainfo@occ.treas.gov or www.reginfo.gov/public/do/PRAMain. Find this information collection by selecting “Currently under 30-day Review—Open for Public Comments” or using the search function.

The RFA  48 requires an agency, in connection with a proposal and final rule, to prepare and make available to the public a Regulatory Flexibility Analysis that describes the impact of the rule on small entities (defined by the SBA for purposes of the RFA to include commercial banks and savings institutions with total assets of $850 million or less and trust companies with total assets of $47 million or less). However, under section 605(b) of the RFA, this analysis is not required if an agency certifies that the rule would not have a significant economic impact on a substantial number of small entities and publishes its certification and a short explanatory statement in the Federal Register along with its rule. The OCC included an RFA certification in the Federal Register along with its proposal.

As discussed above, the SBA's Office of Advocacy and one other commenter stated that the proposal's RFA certification lacked a factual basis. The SBA's Office of Advocacy, along with other commenters, recommended that the OCC continue to allow expedited review for applications from small entities and allow those entities to continue to use the streamlined application form. Specifically, with respect to the proposal's RFA certification, the SBA's Office of Advocacy's comment and the other comment addressing the RFA stated that it lacked sufficient information about (1) the number of small entities that would be impacted because it only estimated the number of entities that would apply for business combinations in a given year and did not explain how many of those entities were small entities and (2) the basis for its conclusion that the impact on affected institutions would be de minimis .

The OCC currently supervises 1,040 institutions (commercial banks, trust companies, Federal savings associations, and branches or agencies of foreign banks), 49 of which approximately 636 are small entities. 50 As the SBA's Office of Advocacy noted, all of the 636 small entities may have been impacted by the proposed rule to the extent that they elected to submit applications to the OCC for approval of business combination activities. However, in practice and based on the number of merger applications that the OCC has received annually over the past five years, the agency expects the annual impact of the final rulemaking could be 78 OCC-supervised small institutions in a given year, assuming that all merger applications are submitted by small banks.

In terms of the potential economic impact of the final rule on affected institutions, the OCC does not expect that the changes will result in (1) a different outcome for merger applications or (2) additional burden on affected institutions. First, the final appendix A aims to provide transparency with respect to the OCC's BMA review process, including consideration of certain statutory factors under the BMA. This should provide regulated institutions with additional clarity and transparency about the OCC's decision-making process. Second, the removal of the expedited review process will likely not result in any change to the timing of the OCC's processing of licensing applications. The only benefit conferred by the expedited review provisions in § 5.33(i) is that applications are deemed approved as of the 15th day after the close of the comment period unless the OCC takes action to remove the application from expedited review or extends the process. However, the OCC is not aware of an application for a business combination being deemed approved due to the passage of time under § 5.33(i). Third, the OCC expects that the removal of the streamlined application form will not result in a substantive impact on affected institutions or on the information collected. Although the Interagency Bank Merger Act Application requires the submission of additional documentation and information with the initial application, that documentation and information is largely related to the same categories of information. Further, in practice, the OCC may request additional information from applicants to enable it to conclude on the applicable statutory factors. Eliminating the streamlined application may decrease the likelihood the OCC needs to request additional information from applicants, which could otherwise slow down the processing of an application. The agency also does not expect that the removal of the streamlined application will result in a material change to the time it takes to OCC to respond to submitting banks and, therefore, does not expect any subsequent impact on bank operations that could otherwise result from a delayed response from the OCC. Accordingly, the OCC expects these changes to have a de minimis impact on small entities.

In general, the OCC classifies the economic impact on an individual small entity as significant if the total estimated impact in one year is greater than 5 percent of the small entity's total annual salaries and benefits or greater than 2.5 percent of the small entity's total non-interest expense. Furthermore, the OCC considers 5 percent or more of OCC-supervised small entities to be a substantial number. At present, 32 OCC-supervised small entities constitute a substantial number. Therefore, the final rule will potentially affect a substantial number of OCC-supervised small entities in any given year.

However, based on the thresholds for a significant economic impact, the OCC expects that, if implemented, the final rule will not have a significant economic impact on any small entities. For these reasons, the OCC certifies that the final rule would not have a significant economic impact on a substantial number of small entities.

Section 202 of the Unfunded Mandates Reform Act of 1995 (Unfunded Mandates Act)  51 requires that the OCC prepare a budgetary impact statement before promulgating a rule that includes any Federal mandate that may result in the expenditure by State, local, and Tribal governments, in the aggregate, or by the private sector, of $100 million or more (adjusted annually for inflation, currently $183 million) in any one year. If a budgetary impact statement is required, section 205 of the Unfunded Mandates Act  52 also requires the OCC to identify and consider a reasonable number of regulatory alternatives before promulgating a rule.

The OCC estimates that the annual aggregate cost of the final rule once fully phased in will be de minimis. Furthermore, the rule's changes are not new substantive or information requirements for OCC-supervised institutions but rather describe considerations and principles that guide the OCC's review of applications under the BMA. Therefore, the OCC concludes that the final rule will not result in an expenditure of $183 million or more annually by State, local, and Tribal governments or by the private sector.

Pursuant to section 302(a) of the Riegle Community Development and Regulatory Improvement Act (RCDRIA) of 1994  53 in determining the effective date and administrative compliance requirements for new regulations that impose additional reporting, disclosure, or other requirements on insured depository institutions, the OCC must consider, consistent with principles of safety and soundness and the public interest (1) any administrative burdens that the final rule would place on depository institutions, including small depository institutions and customers of depository institutions, and (2) the benefits of the final rule. In addition, section 302(b) of RCDRIA requires new regulations and amendments to regulations that impose additional reporting, disclosures, or other new requirements on insured depository institutions generally to take effect on the first day of a calendar quarter that begins on or after the date on which the regulations are published in final form. 54 The OCC considered the changes made by this final rule and believes that the effective date of January 1, 2025, will provide OCC-regulated institutions with adequate time to comply with the rule. The final rule will not impose any new administrative compliance requirements, and the administrative burdens from the removal of the Streamlined Application are de minimis.

For purposes of the Congressional Review Act, the Office of Management and Budget (OMB) makes a determination as to whether a final rule constitutes a “major rule.”  55 If a rule is deemed a “major rule” by OMB, the Congressional Review Act generally provides that the rule may not take effect until at least 60 days following its publication. 56

The Congressional Review Act defines a “major rule” as any rule that the Administrator of the Office of Information and Regulatory Affairs of the OMB finds has resulted in or is likely to result in: (1) an annual effect on the economy of $100,000,000 or more; (2) a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions; or (3) significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based enterprises to compete with foreign-based enterprises in domestic and export markets. 57

As required by the Congressional Review Act, the OCC will submit the final rule and other appropriate reports to Congress and the Government Accountability Office for review.

For the reasons set forth in the preamble, OCC amends 12 CFR part 5 as follows:

The Federal Reserve Banks make primary and secondary credit available to depository institutions as a backup source of funding on a short-term basis, usually overnight. The primary and secondary credit rates are the interest rates that the twelve Federal Reserve Banks charge for extensions of credit under these programs. In accordance with the Federal Reserve Act, the primary and secondary credit rates are established by the boards of directors of the Federal Reserve Banks, subject to review and determination of the Board.

On September 18, 2024, the Board voted to approve a 0.50 percentage point decrease in the primary credit rate, thereby decreasing the primary credit rate from 5.50 percent to 5.00 percent. In addition, the Board had previously approved the renewal of the secondary credit rate formula, the primary credit rate plus 50 basis points. Under the formula, the secondary credit rate decreased by 0.50 percentage points as a result of the Board's primary credit rate action, thereby decreasing the secondary credit rate from 6.00 percent to 5.50 percent. The amendments to Regulation A reflect these rate changes.

The 0.50 percentage point decrease in the primary credit rate was associated with a 0.50 percentage point decrease in the target range for the federal funds rate (from a target range of 5 1/4 percent to 5 1/2 percent to a target range of 4 3/4 percent to 5 percent) announced by the Federal Open Market Committee on September 18, 2024, as described in the Board's amendment of its Regulation D published elsewhere in today's Federal Register .

In general, the Administrative Procedure Act (“APA”)  1 imposes three principal requirements when an agency promulgates legislative rules (rules made pursuant to Congressionally delegated authority): (1) publication with adequate notice of a proposed rule; (2) followed by a meaningful opportunity for the public to comment on the rule's content; and (3) publication of the final rule not less than 30 days before its effective date. The APA provides that notice and comment procedures do not apply if the agency for good cause finds them to be “unnecessary, impracticable, or contrary to the public interest.”  2 Section 553(d) of the APA also provides that publication at least 30 days prior to a rule's effective date is not required for (1) a substantive rule which grants or recognizes an exemption or relieves a restriction; (2) interpretive rules and statements of policy; or (3) a rule for which the agency finds good cause for shortened notice and publishes its reasoning with the rule. 3 The APA further provides that the notice, public comment, and delayed effective date requirements of 5 U.S.C. 553 do not apply “to the extent that there is involved . . . a matter relating to agency management or personnel or to public property, loans, grants, benefits, or contracts.”  4

Regulation A establishes the interest rates that the twelve Reserve Banks charge for extensions of primary credit and secondary credit. The Board has determined that the notice, public comment, and delayed effective date requirements of the APA do not apply to these final amendments to Regulation A. The amendments involve a matter relating to loans and are therefore exempt under the terms of the APA. Furthermore, because delay would undermine the Board's action in responding to economic data and conditions, the Board has determined that “good cause” exists within the meaning of the APA to dispense with the notice, public comment, and delayed effective date procedures of the APA with respect to the final amendments to Regulation A.

The Regulatory Flexibility Act (“RFA”) does not apply to a rulemaking where a general notice of proposed rulemaking is not required. 5 As noted previously, a general notice of proposed rulemaking is not required if the final rule involves a matter relating to loans. Furthermore, the Board has determined that it is unnecessary and contrary to the public interest to publish a general notice of proposed rulemaking for this final rule. Accordingly, the RFA's requirements relating to an initial and final regulatory flexibility analysis do not apply.

In accordance with the Paperwork Reduction Act (“PRA”) of 1995, 6 the Board reviewed the final rule under the authority delegated to the Board by the Office of Management and Budget. The final rule contains no requirements subject to the PRA.

For the reasons set forth in the preamble, the Board is amending 12 CFR chapter II as follows:

I. Statutory and Regulatory Background

For monetary policy purposes, section 19 of the Federal Reserve Act (“Act”) imposes reserve requirements on certain types of deposits and other liabilities of depository institutions. 1 Regulation D, which implements section 19 of the Act, requires that a depository institution meet reserve requirements by holding cash in its vault, or if vault cash is insufficient, by maintaining a balance in an account at a Federal Reserve Bank (“Reserve Bank”). 2 Section 19 also provides that balances maintained by or on behalf of certain institutions in an account at a Reserve Bank may receive earnings to be paid by the Reserve Bank at least once each quarter, at a rate or rates not to exceed the general level of short-term interest rates. 3 Institutions that are eligible to receive earnings on their balances held at Reserve Banks (“eligible institutions”) include depository institutions and certain other institutions. 4 Section 19 also provides that the Board may prescribe regulations concerning the payment of earnings on balances at a Reserve Bank. 5 Prior to these amendments, Regulation D established IORB at 5.4 percent. 6

The Board is amending § 204.10(b)(1) of Regulation D to establish IORB at 4.9 percent. The amendment represents a 0.5 percentage point decrease in IORB. This decision was announced on September 18, 2024, with an effective date of September 19, 2024, in the Federal Reserve Implementation Note that accompanied the FOMC's statement on September 18, 2024. The FOMC statement stated that the Committee decided to lower the target range for the federal funds rate to 4 3/4 to 5 percent.

The Federal Reserve Implementation Note stated:

As a result, the Board is amending § 204.10(b)(1) of Regulation D to establish IORB at 4.9 percent.

In general, the Administrative Procedure Act (“APA”)  7 imposes three principal requirements when an agency promulgates legislative rules (rules made pursuant to Congressionally-delegated authority): (1) publication with adequate notice of a proposed rule; (2) followed by a meaningful opportunity for the public to comment on the rule's content; and (3) publication of the final rule not less than 30 days before its effective date. The APA provides that notice and comment procedures do not apply if the agency for good cause finds them to be “unnecessary, impracticable, or contrary to the public interest.”  8 Section 553(d) of the APA also provides that publication at least 30 days prior to a rule's effective date is not required for (1) a substantive rule which grants or recognizes an exemption or relieves a restriction; (2) interpretive rules and statements of policy; or (3) a rule for which the agency finds good cause for shortened notice and publishes its reasoning with the rule. 9

The Board has determined that good cause exists for finding that the notice, public comment, and delayed effective date provisions of the APA are unnecessary, impracticable, or contrary to the public interest with respect to these final amendments to Regulation D. The rate change for IORB that is reflected in the final amendment to Regulation D was made with a view towards accommodating commerce and business and with regard to their bearing upon the general credit situation of the country. Notice and public comment would prevent the Board's action from being effective as promptly as necessary in the public interest and would not otherwise serve any useful purpose. Notice, public comment, and a delayed effective date would create uncertainty about the finality and effectiveness of the Board's action and undermine the effectiveness of that action. Accordingly, the Board has determined that good cause exists to dispense with the notice, public comment, and delayed effective date procedures of the APA with respect to this final amendment to Regulation D.

The Regulatory Flexibility Act (“RFA”) does not apply to a rulemaking where a general notice of proposed rulemaking is not required. 10 As noted previously, the Board has determined that it is unnecessary and contrary to the public interest to publish a general notice of proposed rulemaking for this final rule. Accordingly, the RFA's requirements relating to an initial and final regulatory flexibility analysis do not apply.

In accordance with the Paperwork Reduction Act (“PRA”) of 1995, 11 the Board reviewed the final rule under the authority delegated to the Board by the Office of Management and Budget. The final rule contains no requirements subject to the PRA.

For the reasons set forth in the preamble, the Board amends 12 CFR part 204 as follows:

Background

The FAA issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 to supersede AD 2022-13-11, Amendment 39-22097 (87 FR 39741, July 5, 2022) (AD 2022-13-11). AD 2022-13-11 applied to all Airbus SAS Model A350-941 and -1041 airplanes. AD 2022-13-11 was prompted by a report of inadvertent AFS altitude changes on the FCU; an investigation revealed that, depending on the ring selection, failure of the ALT knob on the FCU could change the target altitude. AD 2022-13-11 required revising the existing AFM to include a procedure on the use of the AFS control panel ALT knob. AD 2022-13-11 also required replacing any affected FCU with a serviceable FCU, which would terminate the AFM revision following that replacement. The FAA issued AD 2022-13-11 to address erroneous target altitude during descent, climb, or go-around, which could result in an unexpected vertical trajectory deviation and loss of correct situational awareness that could potentially result in uncontrolled impact with the ground.

The NPRM published in the Federal Register on April 23, 2024 (89 FR 30281). The NPRM was prompted by AD 2023-0215, dated December 11, 2023; corrected December 13, 2023; issued by EASA, which is the Technical Agent for the Member States of the European Union (EASA AD 2023-0215) (also referred to as the MCAI). The MCAI states that since EASA AD 2021-0260, dated November 18, 2021 (EASA AD 2021-0260), was issued, several operators reported additional incidents of inadvertent AFS altitude changes on airplanes equipped with serviceable FCUs. Airbus is investigating the cause of these reported events and, as a precautionary measure, expanded the applicability of the AFM Temporary Revision (TR) 121, Issue 1, to all airplanes, including those equipped with serviceable FCUs. For the reasons described above, EASA AD 2023-0215 partially retains the requirements of EASA AD 2021-0260, which is superseded, and requires amendment of the applicable AFM by incorporating AFM TR 121, Issue 1, for airplanes equipped with serviceable FCUs. EASA AD 2023-0215 is still considered to be an interim action, and further EASA AD action may follow.

In the NPRM, the FAA proposed to continue to require certain actions in AD 2022-13-11, including replacing any affected FCU with a serviceable FCU, as specified in EASA AD 2023-0215. The NPRM also proposed to require expanding the applicability of the requirement to revise the existing AFM to all Model A350-941 and -1041 airplanes, including those equipped with serviceable FCUs, as specified in EASA AD 2023-0215. The NPRM also proposed to prohibit the installation of affected parts. The FAA is issuing this AD to address erroneous target altitude during descent, climb, or go-around, which could result in an unexpected vertical trajectory deviation and loss of correct situational awareness that could potentially result in uncontrolled impact with the ground.

You may examine the MCAI in the AD docket at regulations.gov under Docket No. FAA-2024-1007.

The FAA received a comment from Air Line Pilots Association, International (ALPA), who supported the NPRM without change.

The FAA received an additional comment from Delta Air Lines (Delta). The following presents the comment received on the NPRM and the FAA's response to the comment.

Delta requested that a new exception be added to paragraph (h) of the proposed AD to extend the compliance time for the replacement of affected FCUs from 25 months to 32 months, due to lack of parts availability. Delta pointed out that it is currently the only U.S. operator affected by AD 2022-13-11 and that Thales, the FCU manufacturer, focused on providing serviceable FCUs to European operators first, since EASA AD 2021-0260 was required to be accomplished sooner than AD 2022-13-11. Delta asserted that this resulted in Delta losing approximately 17 months of the time needed to accomplish the required replacement and therefore, requested the additional 7-month extension. Additionally, Delta pointed out that the replacement is secondary to the requirement to amend the AFM, which affects both serviceable and affected FCUs. Because the compliance time for the AFM amendment is retained as proposed, Delta maintained that an adequate level of safety is provided during the requested extension of the compliance time for replacing the affected FCUs.

The FAA does not agree to extend the compliance time for replacing the affected FCUs. Delta did not provide enough justification to support an extension of the compliance time. In developing an appropriate compliance time for this action, the FAA considered the recommendations of the manufacturer, the urgency associated with the subject unsafe condition, the availability of required parts, and the practical aspect of accomplishing the required replacement within a period of time that corresponds to the normal scheduled maintenance for most affected operators. According to EASA, as the State of Design, parts availability was taken into consideration during development of the compliance time, which was determined to be sufficient to allow for the replacement of the affected parts to address the entire global A350 fleet. In consideration of these items, the FAA has determined that the proposed compliance time will ensure an acceptable level of safety. However, under the provisions of paragraph (i)(1) of this AD, the FAA will consider requests for approval of an extension of the compliance time if sufficient data are submitted to substantiate that the new compliance time would provide an acceptable level of safety. Therefore, no change is necessary to this AD.

This product has been approved by the aviation authority of another country and is approved for operation in the United States. Pursuant to the FAA's bilateral agreement with this State of Design Authority, it has notified the FAA of the unsafe condition described in the MCAI referenced above. The FAA reviewed the relevant data, considered the comments received, and determined that air safety requires adopting this AD as proposed. Accordingly, the FAA is issuing this AD to address the unsafe condition on this product. Except for minor editorial changes, this AD is adopted as proposed in the NPRM. None of the changes will increase the economic burden on any operator.

EASA AD 2023-0215 specifies procedures for revising the existing AFM to include a procedure on the use of the AFS control panel ALT knob for all Airbus SAS Model A350-941 and -1041 airplanes, including the airplanes equipped with serviceable FCUs part number (P/N) C31006AD01; and replacing any affected FCU having P/N C31006AC01 or C31006AB01 with a serviceable FCU having P/N C31006AD01. EASA AD 2023-0215 also prohibits the installation of affected parts.

This material is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

The FAA considers that this AD is an interim action. The FAA anticipates that further AD action will follow.

The FAA estimates that this AD affects 27 airplanes of U.S. registry. The FAA estimates the following costs to comply with this AD:

Background

The FAA issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to all Airbus SAS Model A330-200, A330-200 freighter, A330-800, and A330-900 series airplanes; Model A330-301, -302, -303, -323, -342, and -343 airplanes; and Model A340-312 and -313 airplanes. The NPRM published in the Federal Register on February 12, 2024 (89 FR 9795). The NPRM was prompted by EASA AD 2023-0167, dated August 30, 2023 (EASA AD 2023-0167) (also referred to as the MCAI), issued by EASA, which is the Technical Agent for the Member States of the European Union. The MCAI states there are reports of quality non-conformity on MLG axles where the HVOF coating on the bearing journal runout areas had a coating thicker than allowable limits. This over-thickness could lead to damage, cracking, or spalling of the protective coating, which could expose the base material and allow corrosion to develop. This condition, if not detected and corrected, could lead to a MLG axle failure, possibly resulting in a MLG collapse, with consequent damage to the airplane and injury to occupants.

In the NPRM, the FAA proposed to require repetitive inspections of the affected parts (MLG axles) for any discrepancy, corrective actions, and eventual replacement of affected parts, and to prohibit the installation of affected parts, as specified in EASA AD 2023-0167. The FAA is issuing this AD to address the unsafe condition on these products.

You may examine the MCAI in the AD docket at regulations.gov under Docket No. FAA-2024-0223.

The FAA received comments from two commenters, Air Line Pilots Association, International (ALPA), and an anonymous commenter, who supported the NPRM without change.

The FAA received additional comments from Delta Air Lines. The following presents the comments received on the NPRM and the FAA's response to each comment.

Delta Air Lines (Delta) requested adding an exception to paragraph (h) of the proposed AD to clarify note 2 of EASA AD 2023-0167 regarding installation versus re-installation of affected parts. Delta requested that the exception state that if an assembly, including the bogie beam assembly, containing an affected part is removed and re-installed during a single maintenance visit, that action is not considered an installation as specified in paragraph (7) of EASA AD 2023-0167. Delta stated that note 2 of EASA AD 2023-0167 allows the MLG to be removed and re-installed during the same maintenance visit but does not address sub-assemblies containing affected parts.

The FAA agrees to add an exception to paragraph (h) of this AD to address reinstallation of assemblies, including bogie beam assemblies. As defined in EASA AD 2023-0167, the affected parts are MLG axles with certain part numbers and serial numbers. The MLG axle is installed in the MLG bogie beam assembly. Bogie beam assemblies with an affected axle may be removed and reinstalled on the MLG as a separate unit. Paragraph (7) of EASA AD 2023-0167 prohibits the installation of a MLG having an affected axle. Note 2 of EASA AD 2023-0167 allows removal of MLG having an affected axle and subsequent reinstallation of that MLG on the same airplane, accomplished during a single maintenance visit, which is not considered as an installation as specified in paragraph (7) of EASA AD 2023-0167. Since the bogie beam assembly, with an affected axle, may be removed and reinstalled on the MLG as a separate unit during a single maintenance visit, such reinstallation should also not be considered an installation as specified in paragraph (7) of EASA AD 2023-0167. Paragraph (h)(5) has been added to this AD accordingly.

Delta requested an exception be added to paragraph (h) of the proposed AD to address an error in the service information referenced in EASA AD 2023-0167. Delta stated that a “Required for Compliance” (RC) step, paragraph 3.C.(1)(b) 1a (in Task set A330-A-32-XX-3305-01000-93BA-A), specifies to “remove the cover protection of the affected axle,” but pointed out that a note advises against the removal of paint or zinc nickel to complete the inspection. Delta added that it asked Airbus for clarification and that Airbus confirmed that the paint or zinc nickel on the HVOF should not be removed, and that the step “remove the cover protection of the affected axle” should be deleted from the service information. Delta asserted that adding the exception to delete the step would eliminate the need to request an alternative method of compliance (AMOC) when the final AD is published.

The FAA agrees to add an exception to paragraph (h) of this AD to address the specified error in the procedures for a detailed inspection of the affected axle. The exception in paragraph (h)(6) of this AD has been added for the reasons described by Delta.

This product has been approved by the aviation authority of another country and is approved for operation in the United States. Pursuant to the FAA's bilateral agreement with this State of Design Authority, it has notified the FAA of the unsafe condition described in the MCAI referenced above. The FAA reviewed the relevant data, considered the comments received, and determined that air safety requires adopting this AD as proposed. Accordingly, the FAA is issuing this AD to address the unsafe condition on this product. Except for minor editorial changes, and any other changes described previously, this AD is adopted as proposed in the NPRM. None of the changes will increase the economic burden on any operator.

EASA AD 2023-0167 specifies, for certain airplanes, procedures for repetitive inspections of the affected parts (MLG axles) for any discrepancy (damage, cracking, or spalling of HVOF coating, or corrosion), doing corrective actions including obtaining and following repair instructions and replacement of affected parts. EASA AD 2023-0167 also prohibits the installation of affected parts, and installation of MLG having an affected part installed. This material is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

The FAA estimates that this AD affects 7 airplanes of U.S. registry. The FAA estimates the following costs to comply with this AD:

The FAA estimates the following costs to do any necessary on-condition actions that would be required based on the results of any required actions. The FAA has no way of determining the number of aircraft that might need these on-condition actions:

Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. Subtitle VII: Aviation Programs, describes in more detail the scope of the Agency's authority.

The FAA is issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701: General requirements. Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.

This AD will not have federalism implications under Executive Order 13132. This AD will not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.

For the reasons discussed above, I certify that this AD:

(1) Is not a “significant regulatory action” under Executive Order 12866,

(2) Will not affect intrastate aviation in Alaska, and

(3) Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

Accordingly, under the authority delegated to me by the Administrator, the FAA amends 14 CFR part 39 as follows:

Background

The FAA issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 to supersede AD 2020-25-07, Amendment 39-21349 (85 FR 81385, December 16, 2020) (AD 2020-25-07). AD 2020-25-07 applied to certain Embraer S.A. Model EMB-550 and EMB-545 airplanes. AD 2020-25-07 required repetitive inspections of the flight deck side windows for any cracking or delamination, corrective action if necessary, and eventual replacement of the windows. The FAA issued AD 2020-25-07 to address cracks and delamination, which could cause the flight deck side windows to fail and lead to an in-flight depressurization event.

The NPRM published in the Federal Register on May 17, 2024 (89 FR 43336). The NPRM was prompted by AD 2020-04-01R02, effective November 2, 2023, issued by ANAC, which is the aviation authority for Brazil (ANAC AD 2020-04-01R02) (also referred to as the MCAI). The MCAI states that part number (P/N) NP-200402-7 and P/N NP-200402-8, made mandatory by the previous revisions of the MCAI, have not had the expected effect on the fleet as premature cracks in the outer layer of windows with P/N NP-200402-7 and P/N NP-200402-8 have been found. These cracks may be undetected, and the inner layer may be subjected to unpredicted loads for several flights, which could result in window failure and subsequent in-flight depressurization events.

In the NPRM, the FAA proposed to continue to require the actions in AD 2020-25-07, expand the list of affected parts, and prohibit the installation of affected parts, as specified in ANAC AD 2020-04-01R02. The FAA is issuing this AD to address the unsafe condition on these products.

You may examine the MCAI in the AD docket at regulations.gov under Docket No. FAA-2024-1304.

The FAA received no comments on the NPRM or on the determination of the cost to the public.

The FAA revised paragraph (h)(5) of this AD to clarify that the 50 flight cycle grace period is “within 50 flight cycles after the effective date of this AD.” In the proposed AD, the FAA inadvertently omitted the wording “after the effective date of this AD.”

After the FAA issued the proposed AD, ANAC issued an Errata to ANAC AD 2020-04-01R02, effective November 2, 2023, to clarify the actions if an inspection is done and delamination or other damage which does not impact the ability to properly perform the inspection is found. As originally written, operators could have concluded a windshield needed to be replaced even if the only inspection finding was delamination in an area that did not impede the inspection. The FAA has revised paragraph (h)(3) of this AD to clarify the action for this condition.

This product has been approved by the aviation authority of another country and is approved for operation in the United States. Pursuant to the FAA's bilateral agreement with this State of Design Authority, it has notified the FAA of the unsafe condition described in the MCAI referenced above. The FAA reviewed the relevant data and determined that air safety requires adopting this AD as proposed. Accordingly, the FAA is issuing this AD to address the unsafe condition on this product. Except for minor editorial changes, and any other changes described previously, this AD is adopted as proposed in the NPRM. None of the changes will increase the economic burden on any operator.

ANAC AD 2020-04-01R02 specifies procedures for initial and repetitive detailed inspections of the left-hand flight deck side window P/N NP-200402-1 or P/N NP-200402-5 and right-hand flight deck side window P/N NP-200402-2 or P/N NP-200402-6 to detect cracks, delamination, or any other damage (such as scratches, chipping, erosion, and crazing), and replacement of the windows with a new window P/N NP-200402-9 or P/N NP-200402-10, as applicable. ANAC AD 2020-04-01R02 also prohibits the installation of flight deck side windows with P/N NP-200402-1, P/N NP-200402-2, P/N NP-200402-5, P/N NP-200402-6, P/N NP-200402-7, and P/N NP-200402-8, on any airplane.

This material is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

The FAA estimates that this AD affects 44 airplanes of U.S. registry. The FAA estimates the following costs to comply with this AD:

The FAA estimates the following costs to do any necessary on-condition action that would be required based on the results of any required actions. The FAA has no way of determining the number of aircraft that might need this on-condition action:

According to the manufacturer, some or all of the costs of this AD may be covered under warranty, thereby reducing the cost impact on affected individuals. The FAA does not control warranty coverage for affected individuals. As a result, the FAA has included all known costs in the cost estimate.

Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. Subtitle VII: Aviation Programs, describes in more detail the scope of the Agency's authority.

The FAA is issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701: General requirements. Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.

This AD will not have federalism implications under Executive Order 13132. This AD will not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.

For the reasons discussed above, I certify that this AD:

(1) Is not a “significant regulatory action” under Executive Order 12866,

(2) Will not affect intrastate aviation in Alaska, and

(3) Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

Accordingly, under the authority delegated to me by the Administrator, the FAA amends 14 CFR part 39 as follows:

Background

The FAA issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to certain Bombardier, Inc., Model BD-100-1A10 airplanes. The NPRM published in the Federal Register on June 5, 2024 (89 FR 48139). The NPRM was prompted by AD CF-2023-29, dated May 5, 2023, issued by Transport Canada, which is the aviation authority for Canada (referred to after this as the MCAI). The MCAI states that the time limits/maintenance check (TLMC) airworthiness limitation (AWL) Task 54-51-00-111*, “Discard of the Aft Engine Mount Bolts, Part No. MS21250-07, Non-Serialized,” was not performed on some Challenger 300 in-service airplanes due to a misleading part number (P/N) referenced in the TLMC manual. The task requires the discard and replacement of the aft engine mount attachment bolt, P/N MS21250-07, while the P/N shown in the TLMC manual is P/N MS21250-7 in lieu of P/N MS21250-07. Bombardier revised the TLMC AWL task and the relevant sections in the aircraft maintenance manual and the aircraft illustrated parts catalog with P/N MS21250-07 to ensure timely discard and replacement of the aft engine mount attachment bolts.

In the NPRM, the FAA proposed to require revising the existing maintenance or inspection program, as applicable, to incorporate a revised restrictive airworthiness limitation for the aft engine mount attachment bolts. The FAA is issuing this AD to address potential failures of the aft engine mount attachment bolt, P/N MS21250-07. The unsafe condition, if not addressed, could lead to the detachment of the engine from the airplane, which could contribute to a catastrophic failure.

You may examine the MCAI in the AD docket at regulations.gov under Docket No. FAA-2024-1479.

The FAA received no comments on the NPRM or on the determination of the cost to the public.

This product has been approved by the aviation authority of another country and is approved for operation in the United States. Pursuant to the FAA's bilateral agreement with this State of Design Authority, it has notified the FAA of the unsafe condition described in the MCAI referenced above. The FAA reviewed the relevant data and determined that air safety requires adopting this AD as proposed. Accordingly, the FAA is issuing this AD to address the unsafe condition on this product. Except for minor editorial changes, this AD is adopted as proposed in the NPRM. None of the changes will increase the economic burden on any operator.

The FAA reviewed the following documents. This material specifies a revised airworthiness limitation for the replacement of the aft engine mount attachment bolts, P/N MS21250-07. These documents are distinct since they apply to different airplane configurations. The asterisk (or “one star”) with the last three digits of the task numbers indicates that the task is an airworthiness limitation task.

• Task 54-51-00-111* “Discard of the Aft Engine Mount Bolts, Part No. MS21250-07, Non-Serialized,” Section 5-10-10 “Life Limits (Structures),” Part 2 “Airworthiness Limitations,” of the Bombardier Challenger 300 Time Limits/Maintenance Check, Publication No. CH 300 TLMC, Revision 24, dated August 9, 2023.

• Task 54-51-00-111* “Discard of the Aft Engine Mount Bolts, Part No. MS21250-07, Non-Serialized,” Section 5-10-10 “Life Limits (Structures),” Part 2 “Airworthiness Limitations,” of the Bombardier Challenger 350 Time Limits/Maintenance Check, Publication No. CH 350 TLMC, Revision 14, dated August 9, 2023.

This material is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

The FAA estimates that this AD affects 731 airplanes of U.S. registry. The FAA estimates the following costs to comply with this AD:

The FAA has determined that revising the maintenance or inspection program takes an average of 90 work-hours per operator, although the agency recognizes that this number may vary from operator to operator. Since operators incorporate maintenance or inspection program changes for their affected fleet(s), the FAA has determined that a per operator estimate is more accurate than a per-airplane estimate. Therefore, the agency estimates the average total cost per operator to be $7,650 (90 work-hours × $85 per work-hour).

Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. Subtitle VII: Aviation Programs, describes in more detail the scope of the Agency's authority.

The FAA is issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701: General requirements. Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.

This AD will not have federalism implications under Executive Order 13132. This AD will not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.

For the reasons discussed above, I certify that this AD:

(1) Is not a “significant regulatory action” under Executive Order 12866,

(2) Will not affect intrastate aviation in Alaska, and

(3) Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

Accordingly, under the authority delegated to me by the Administrator, the FAA amends 14 CFR part 39 as follows:

A notice of proposed rulemaking was published in the Federal Register on March 21, 2024; New York Register on April 10, 2024; Pennsylvania Bulletin on April 13, 2024; and Maryland Register on April 5, 2024. The Commission convened a public hearing on May 2, 2024, to hear testimony on the proposed rulemaking. A written comment period was held open to May 13 and extended upon request to June 10, 2024.

During this official public comment period, only one comment was received. The commented focused exclusively on the language added to new paragraph (d) in § 801.12 regarding dry cooling and electric power generation. The commenter asked that the nuclear power industry be wholly exempted from this requirement, stating that the Commission's regulatory review regulations at part 806 fully covered the use of water and impacts of water use by industry and that dry cooling was not practicable for nuclear power plants. The commenter also noted that the Commission did not provide a definition of “significantly modified power generation plants” in the rulemaking.

The Commission will continue to require the power generation industry, including the nuclear power industry, to evaluate water use and utilize readily available technologies to reduce water use. The Commission believes that smaller nuclear power plants may be able to use dry cooling and hybrid dry cooling systems in the future. In light of the comment, the Commission does amend the original language proposed in paragraph (d) of § 801.12 to focus on the requirement that project sponsors of power generation plants must evaluate their projected water use and consider all available and feasible technologies, including but not limited to dry cooling, that could lower overall consumptive use of water. This change broadens the focus not just on dry cooling but also on other technologies that may be more feasible for the nuclear power industry as well as the power generation industry as a whole. The Commission also added clarity on what a “significantly modified power plant” would be in the context of this paragraph.

The Commission received no other comments on any other aspects of the proposed rule or part 801 and therefore made no additional changes to the language in this final rule.

Accordingly, for the reasons set forth in the preamble, the Susquehanna River Basin Commission amends 18 CFR part 801 as follows:

I. Background Information

The RRB published a Notice of Proposed Rulemaking (NPRM) in the Federal Register on November 9, 2016 (81 FR 78757). The preamble to the NPRM discussed the changes from our current rules and our reasons for proposing those changes. In the NPRM, we proposed to clarify our regulations to require you to inform us about or submit all evidence known to you that relates to your disability claim, subject to two exceptions for certain privileged communications. We explained that this requirement would include the duty to submit all evidence from any source in its entirety, unless subject to one of these exceptions. We also proposed to require your representative to help you obtain the information or evidence that we would require you to submit under our regulations.

We provided 60 days for the public to comment on the NPRM. We received four comments: two comments were submitted anonymously, and two comments were from individual members of the public. All four comments focused on the requirement to submit all evidence that relates to an individual's disability claim. None of the four comments discussed the exceptions for material protected by attorney-client privilege or attorney work product doctrine. We provide summaries of the significant comments that were relevant to this rulemaking and our responses to those comments in Part II below. One comment was entirely supportive of the proposed changes. We appreciate that comment but have not summarized or responded to it below because it does not require a response.

In the process of reviewing the public comments to the NPRM, we independently determined that one change in the proposed rule would unintentionally increase the burden on us and on individuals claiming benefits to require development of a complete medical history covering at least the full 12 months prior to the application filing date, even when a fully favorable adjudication of the application is supported by medical evidence without development of the full 12 months of medical history. As explained in Part III below, we are modifying the final rule to keep existing language and eliminate this unintended effect. After carefully considering the public comments, we are otherwise adopting the proposed rule revisions without change.

Comment: One commenter advocated for a standardized form or template for medical sources to use when submitting medical evidence, to allow medical sources to simply fill out the form rather than write an opinion letter. The commenter also suggested that evidence should only consist of formal, official medical documents, not oral or unofficial written material. Finally, the commenter suggested the rule contain more explanation of the type of benefits a disabled employee can receive in the workplace.

Response: We did not adopt these suggestions. We disagree that a standardized form is needed for submitting medical evidence. The obligation to submit evidence described by this rule extends beyond opinion letters or medical source's assessments of an individual's capacity to work. Instead, medical evidence as described in our regulations at 20 CFR 220.46 encompasses office and progress notes, prior medical history, clinical findings such as the results of physical and mental examinations, laboratory findings, diagnosis, prescribed treatment, and other types of evidence that would be maintained in a medical source's file, in addition to statements about the claimant's ability to work despite the claimant's impairment. These records may be generated and maintained by many different medical providers, each with their own electronic or manual medical record system. Requiring all providers to submit these widely varying types of evidence in a standardized common form would be much more burdensome on providers than simply accepting copies of the medical records as they are already maintained by the providers in a native format and increases the risk that important evidence might be omitted in the process of transcribing records from their native format into the standardized common form. Additionally, medical providers have already widely adopted the SOAP (Subjective, Objective, Assessment and Plan) structure for documenting health care, which promotes effective communication between medical providers by organizing the most important information in an easily recognizable way and an easy to find location. 1 This commonly used technique for organizing information in medical notes also assists our adjudicators to review medical evidence effectively even in the absence of a specific RRB-required form. In comparison to the burdens and risks imposed by requiring a specific RRB-required form, the gains in efficiency and ease of reviewing medical evidence in such a standardized common form are marginal and do not justify imposing such a requirement.

We also disagree that evidence must be contained in a formal or official document to be considered. The rule as proposed does not expand or restrict the existing definition of “evidence” for purposes of evaluating disability claims under the Railroad Retirement Act. Our regulations at § 220.46 explain we may use information from other sources to understand how an impairment affects a claimant's ability to work, including observations by nonmedical sources. For many of the same reasons explained above for why we decline to require a standardized form for submitting medical evidence, we decline to impose a threshold requirement of formality on receiving and considering medical or nonmedical evidence. Although receiving such evidence in the form of formal written documents may be preferable in many circumstances, we will not reject or decline to consider evidence that is submitted merely because it is submitted in an oral or informal written manner.

Finally, we disagree with the need to explain more expansively what sort of benefits a disabled employee can receive in the workplace. The requirement to submit all evidence related to an individual's disability claim applies only to claims for disability under the Railroad Retirement Act for work in an employee's regular railroad occupation and disability under the Railroad Retirement Act for any regular employment. Other benefits that an employee may or may not be entitled to in connection with a disability are outside the scope of this rule and may not even be administered by the RRB. Therefore, such other benefits need not be addressed here.

Comment: One commenter criticized the existing regulations as not requiring claimants to provide evidence of age, education, work experience, or daily activities, and suggested requiring this evidence would reduce fraud.

Response: We believe this comment is based on an inaccurate factual premise, and the proposed rule need not be modified to address it. The existing regulation already provides that we may ask claimants to provide evidence about age, education, work experience, and daily activities when the facts of a specific case require it. While every claim for disability under the Railroad Retirement Act will require medical evidence to adjudicate the claim, not every claim will require all categories of vocational and other evidence articulated in the regulation. For example, when finding that an individual is medically disabled as explained in 20 CFR 220.110, we will not consider the individual's residual functional capacity, age, education, or work experience because those factors are not relevant to the determination. The proposed changes to 20 CFR 220.45 preserve our right to request necessary information about these non-medical factors when it is necessary to adjudicate a claim. This information is usually gathered initially as part of the application for disability, as approved by the Office of Management and Budget under control number 3220-0002. This collection has been approved without changes since 1990. The changes proposed by the NPRM do not affect or modify that information collection. Therefore, we do not believe any changes to the proposed rule are required to address this concern.

Comment: One commenter criticized the proposed rule as creating an undue burden on disabled claimants by requiring submission of evidence that is not relevant to the determination of disability status. The commenter also stated requiring all known evidence to be submitted is more likely to necessitate additional investigation based on extraneous information. The commenter advocated for leaving the existing rule in place without changes.

Response: We disagree with the commenter. Unless the context indicates otherwise, we generally intend for the words we use in our regulations to be construed according to their ordinary meaning. In this rule, we intend for the word “relates” to have its ordinary meaning, which is to show or establish a logical or causal connection between two things. Although this meaning is broad and includes anything that has a logical or causal connection to the disability claim (including unfavorable evidence), evidence that is entirely irrelevant to the determination of disability would not “relate[s] to” the claimed disability. It is also important to note that we consider all of a claimant's impairments for which we have evidence or may develop evidence, not just the ones alleged, and we consider the combined effect of all impairments. 2 We are also required, subject to certain exceptions, to develop a complete medical history for at least the 12 months preceding the date of the disability application. 3 Therefore, evidence of treatment for conditions other than the one alleged by the claimant could relate to the disability claim. For example, if a claimant alleged a back impairment, the treatment records from health care providers other than the treating orthopedic surgeon (for example, from a family doctor who has rendered treatment for a condition other than the one alleged) may contain related information. Therefore, we may ask the claimant if they saw other providers during the period at issue. In addition, if the back impairment arose out of an injury at work, we would expect the claimant, upon our request, to inform us whether they filed a worker's compensation claim or personal injury lawsuit under the Federal Employers Liability Act (45 U.S.C. 51-60). If so, we may obtain the records from that claim, because they may contain evidence that “relates” to the claim for disability.

Because the commenter discussed the burden of submitting all evidence, we also considered whether this requirement is consistent with Executive Order 14058, Transforming Federal Customer Experience and Service Delivery to Rebuild Trust in Government, 86 FR 71357 (Dec. 16, 2021). The order establishes an executive branch policy for agencies to effectively reduce administrative burdens and minimize “time taxes” to more directly meet the needs of the people of the United States. We do not believe that clarifying the requirement to submit all evidence known to the claimant that relates to the claimed disability will result in a substantially increased burden on claimants. The rule does not require the claimant to create or obtain new evidence, only to inform the RRB of evidence that the claimant is aware of. The rule requires the RRB to assist the claimant in obtaining the required evidence if necessary. If the claimant informs the RRB about the existence of evidence, and the RRB is unable to obtain the evidence, the claimant has fulfilled the claimant's obligation and the RRB will not penalize the claimant or make any negative inference about the claimant's disability because of the inability to obtain evidence. When the claimant receives evidence from another source (for example, if the claimant obtains a copy of medical records from a primary care provider), the final rule requires the claimant to submit a complete copy rather than selectively choose which portions to submit. This should require less work on the part of the claimant or the claimant's representative by removing the need to exercise judgment over which portions of medical records should be submitted. Finally, the requirement to submit all evidence will enable us to obtain more complete case records and adjudicate claims more accurately, serving both a program integrity function (to ensure we do not improperly pay benefits) and the claimant's interest in receiving an accurate determination. In some cases, receiving complete copies of medical evidence and being informed of all evidence related to a particular claim will avoid the need for us to obtain consultative examinations of the claimant as explained in 20 CFR Subpart G, and this will facilitate prompt adjudications and save the claimant the burden of time and travel to attend such a consultative examination. These benefits outweigh the minimal additional burden that may result from this requirement.

In reviewing the submitted public comments, we independently determined one of the proposed changes to 20 CFR 220.45(b) would increase the burden on us and on individuals claiming benefits in a way we did not intend and do not believe is necessary or beneficial. Currently, our regulations require us to develop a complete medical history covering at least the full 12 months preceding your application for benefits before we can decide that you are not disabled, unless you tell us your disability began less than 12 months before you filed your application. This language allows our adjudicators to make fully favorable allowance determinations without awaiting receipt of, or continuing to follow up on, requests for evidence that in the judgment of the adjudicator should not affect the allowance determination, if the evidence we possess is complete and detailed enough to support such a decision. 4 This standard is consistent with Social Security Administration regulations and policy regarding evaluation of disability claims. 5

In the NPRM, we proposed to change the language in 20 CFR 220.45(b) to state we will develop that complete medical history covering the preceding 12 months before making any determination on your disability status. If implemented, this change would eliminate our discretion to make a fully favorable allowance decision based on less than 12 months of medical history, even when the evidence is complete and detailed enough to support a fully favorable decision. Favorable decisions could be delayed as a result while we wait for additional evidence or responses that we do not expect will change the result of the case. We did not intend to foreclose the use of discretion in this category of cases when we published the NPRM. As a result, we are modifying the language in the final rule to maintain the existing standard that permits fully favorable decisions with less than 12 months of medical history, if the evidence in our possession is complete and detailed enough to fully support the favorable decision. We also identified and fixed a small number of typographical and grammatical errors that do not affect the substance of the rule.

The RRB, with the Office of Management and Budget, has determined that this is not a significant regulatory action under Executive Order 12866, as supplemented by Executive Order 13563. Therefore, no regulatory impact analysis is required.

This proposed rule will not have substantial direct effects on the States, on the relationship between the National Government and the States, or on the distribution of power and responsibilities among the various levels of government. Therefore, in accordance with section 6 of Executive Order 13132, the RRB believes that this proposed rule will not have sufficient federalism implications to warrant the preparation of a federalism summary impact statement.

The RRB certifies that this rule will not have a significant economic impact on a substantial number of small entities because the rulemaking affects individuals only. Therefore, a regulatory flexibility analysis is not required under the Regulatory Flexibility Act, as amended.

This rule does not create any new or affect any existing collections and, therefore, does not require Office of Management and Budget approval under the Paperwork Reduction Act.

For the reasons set out in the preamble, the Railroad Retirement Board proposes to amend 20 CFR part 220 as follows:

I. Background

The Transportation, Housing and Urban Development, and Related Agencies Appropriations Act, 2015 (division K of Public Law 113-235, approved December 16, 2014) (2015 Appropriations Act) provided that “the Secretary shall collect fees from borrowers, notwithstanding subsection (m) of such section 108, to result in a credit subsidy cost of zero for guaranteeing . . .” Section 108 loans. Section 108(m) of the Housing and Community Development Act of 1974 states that “No fee or charge may be imposed by the Secretary or any other Federal agency on or with respect to a guarantee made by the Secretary under this section after February 5, 1988.” Identical language was continued or included in the Department's continuing resolutions and appropriations acts authorizing HUD to issue Section 108 loan guarantees during Fiscal Years (FYs) 2016 to 2024. HUD anticipates that the Fiscal Year (FY) 2025 HUD appropriations bill under consideration  1 also has identical language suspending the prohibition against charging fees for loans issued with Section 108 guarantees after February 5, 1988, and requiring that the Secretary collect fees from borrowers to result in a credit subsidy cost of zero for the Section 108 Program.

On November 3, 2015, HUD published a final rule (80 FR 67626) that amended the Section 108 Program regulations at 24 CFR part 570 to establish additional procedures, including procedures for announcing the amount of the fee each fiscal year when HUD is required to offset the credit subsidy costs to the Federal Government to guarantee Section 108 loans. For FYs 2016 to 2024, HUD published notifications to set the fees. 2

If authorized by statute, this document sets the fee for Section 108 loan disbursements under loan guarantee commitments awarded for FY 2025 at 0.82 percent of the principal amount of the loan. HUD will collect this fee from borrowers of loans guaranteed under the Section 108 Program to offset the credit subsidy costs of the guaranteed loans pursuant to commitments awarded in FY 2025 if the FY 2025 HUD appropriations bill under consideration is enacted, or if HUD is otherwise required or authorized by statute to collect fees from borrowers to offset the credit subsidy costs of the guaranteed loans, notwithstanding subsection (m) of section 108 of the Housing and Community Development Act of 1974 (42 U.S.C. 5308(m)). The calculation of the FY 2025 fee uses a similar calculation model as the FY 2016 to FY 2024 fee notifications, but incorporates updated information regarding the composition of the Section 108 portfolio and the timing of the estimated future cash flows for defaults and recoveries. The calculation of the fee is also affected by the discount rates required to be used by HUD when calculating the present value of the future cash flows as part of the Federal budget process. HUD is also changing some of the underlying assumptions of the fee calculation for this fee announcement.

As described in 24 CFR 570.712(b), HUD's credit subsidy calculation is based on the amount required to reduce the credit subsidy cost to the Federal Government associated with making a Section 108 loan guarantee to the amount established by applicable appropriation acts. As a result, HUD's credit subsidy cost calculations incorporated assumptions based on: (1) data on default frequency for municipal debt where such debt is comparable to loans in the Section 108 loan portfolio; (2) data on recovery rates on collateral security for comparable municipal debt; (3) the expected composition of the Section 108 portfolio by end users of the guaranteed loan funds ( e.g., third-party borrowers and public entities); and (4) other factors that HUD determined were relevant to this calculation ( e.g., assumptions as to loan disbursement and repayment patterns). HUD changed the assumptions underlying the fee calculations that had applied in previous fiscal years by (1) increasing the expected housing component of the Section 108 portfolio in anticipation of a Departmental initiative and (2) adjusting the projected repayment period for loans to accommodate more flexible repayment options to be made available under a Departmental initiative, resulting in more principal payments occurring in later years of the loan term.

Taking these factors into consideration, HUD determined that the fee for disbursements made under loan guarantee commitments awarded in FY 2025 will be 0.82 percent, which will be applied only at the time of loan disbursements. Note that future notifications may provide for a combination of upfront and periodic fees for loan guarantee commitments awarded in future fiscal years but, if so, HUD will provide the public an opportunity to comment if appropriate under 24 CFR 570.712(b)(2).

The expected cost of a Section 108 loan guarantee is difficult to estimate using historical program data because there have been no defaults in the history of the program that required HUD to invoke its full faith and credit guarantee or use the credit subsidy reserved each year for future losses. 3 This is due to a variety of factors, including the availability of Community Development Block Grant (CDBG) funds as security for HUD's guarantee as provided in 24 CFR 570.705(b). As authorized by Section 108 of the Housing and Community Development Act of 1974, as amended (42 U.S.C. 5308), borrowers may make payments on Section 108 loans using CDBG grant funds. Borrowers may also make Section 108 loan payments from other anticipated sources but continue to have CDBG funds available should they encounter shortfalls in the anticipated repayment source. Despite the program's history of no defaults, Federal credit budgeting principles require that the availability of CDBG funds to repay the guaranteed loans cannot be assumed in the development of the credit subsidy cost estimate (see 80 FR 67629, November 3, 2015). Thus, the estimate must incorporate the risk that alternative sources are used to repay the guaranteed loan in lieu of CDBG funds, and that those sources may be insufficient. Based on the rate that CDBG funds are used annually for repayment of loan guarantees, HUD's calculation of the credit subsidy cost must acknowledge the possibility of future defaults if those CDBG funds were not available. The fee of 0.82 percent of the principal amount of the loan will offset the expected cost to the Federal Government due to default, financing costs, and other relevant factors. To arrive at this measure, HUD analyzed data on comparable municipal debt over an extended period. The estimated rate is based on the default and recovery rates for general purpose municipal debt and industrial development bonds. The cumulative default rates on industrial development bonds were higher than the default rates on general purpose municipal debt during the period from which the data were taken. These two subsectors of municipal debt were chosen because their purposes and loan terms most closely resemble those of Section 108 guaranteed loans.

In this regard, Section 108 guaranteed loans can be broken down into two categories: (1) loans that finance public infrastructure and activities to support subsidized housing (other than financing new construction) and (2) other development projects ( e.g., retail, commercial, industrial). The 0.82 percent fee was derived by weighting the default and recovery data for general purpose municipal debt and the data for industrial development bonds according to the expected composition of the Section 108 portfolio by corresponding project type. Based on the dollar amount of Section 108 loan guarantee commitments awarded from FY 2019 through FY 2023 and expected Section 108 guaranteed loans as part of a Departmental initiative, HUD expects that 71.7 percent of the Section 108 portfolio will be similar to general purpose municipal debt and 28.3 percent of the portfolio will be similar to industrial development bonds. In setting the fee at 0.82 percent of the principal amount of the guaranteed loan, HUD expects that the amount generated will fully offset the cost to the Federal Government associated with making guarantee commitments awarded in FY 2025. Note that the fee decreased from 1.64 percent in FY 2024 to 0.82 percent in FY 2025, a decrease of 0.82 percentage points in the level of fee charged.

This document establishes a statutorily required fiscal requirement in the form of a fee based on rate and cost determinations that does not constitute a development decision that affects the physical condition of specific project areas or building sites. Accordingly, under 24 CFR 50.19(c)(6), this document is categorically excluded from environmental review under the National Environmental Policy Act of 1969 (42 U.S.C. 4321).

HUD solicits comment on the fee rate to be imposed on the Section 108 Program. HUD will publish a second Federal Register notice, if necessary, after consideration of public comments. This announced fee goes will become applicable on October 28, 2024 unless HUD indicates its intent to publish a second Federal Register notice through a notice on https://www.hud.gov/program_offices/comm_planning/section108 on October 25, 2024.

I. Background

The Treasury regulations appearing at 31 CFR 100.11 are promulgated under 31 U.S.C. 321 and relate to the exchange of bent and partial coin. The last amendment to 31 CFR part 100, subpart C, was on December 20, 2017. In August 2018, the United States Mint suspended the redemption program due to the possibility of unlawful material being submitted for redemption. On May 5, 2021, the United States Mint issued a notice of proposed rulemaking proposing certain revisions to these regulations (86 FR 23877), which was withdrawn on May 3, 2024 (89 FR 36721). The United States Mint subsequently decided to close the bent and partial coin exchange program.

For many years, the United States Mint has redeemed bent and partial coins for full face value. However, circumstances surrounding the redemption program have materially changed. Today submissions must be carefully evaluated to ensure that counterfeit coins are not accepted to the program, and the condition of many coins, particularly large volumes of coins damaged by recycling or industrial processes, makes authentication increasingly difficult and time-consuming. In addition, the volume of coins submitted for possible redemption has greatly increased, and counterfeits have been increasingly identified in imported coins intercepted by law enforcement, as well as in several large submissions to the redemption program. The result of these changes is that there is no financially responsible way to ensure the integrity of the redemption program and to the meet the full level of demand. The United States Mint's capacity to process mutilated coins is limited by physical storage capacity, caseload complexity, and workload. Authentication procedures require extensive time and resources. The United States Mint has dedicated substantial time and resources to the bent and partial coin exchange program, in addition to operating the program at a loss by paying out face value for redemptions.

In 89 FR 36721, May 3, 2024, the United States Mint issued a notice of proposed rulemaking (NPRM) to remove regulations relating to the exchange of bent and partial coins, and it requested comments on the proposed revisions. In the NPRM, the Mint proposed to end the exchange program for bent and partial coin. As discussed below, the United States Mint has considered the comments received and has concluded that the proposed regulations will be adopted as a final rule.

The United States Mint received 35 comments in response to the NPRM proposing to end the Mutilated Coin Redemption Program. Eight of these comments were provided by organizations that identified as businesses, two identified as a trade association, and the remainder of the comments were provided by unknown, anonymous, or individual persons. The comments are available at www.regulations.gov.

Some commenters were concerned about the disposal of dimes, quarters, half-dollar, and dollar coins. The proposed rule indicated correctly that the melting of dimes, quarters, half-dollar, and dollar coins is not regulated by the United States Mint. There is no prohibition on melting dimes, quarters, half-dollar, and dollar coins for non-fraudulent purposes. Some commenters expressed concern that 18 U.S.C. 331 criminalizes the melting of all U.S. coins. This statute, however, specifically addresses certain behavior that is conducted with the intent to defraud and does not address coins melted without fraudulent intent and consistent with 31 CFR part 82.

While there is a prohibition against melting pennies and nickels, there is a specific exception at 31 CFR 82.2 for coins melted or treated incidental to recycling other materials if (1) the coins were not added to the other materials for their metallurgical value, (2) the volumes of the coins, relative to the volumes of the other materials recycled, makes it clear that the presence of such coins is merely incidental, and (3) the separation of the coins from the other materials would be impracticable or cost prohibitive. See 31 CFR 82.2(c). This exception extends to the melting of coins that become mutilated due to treatment that is itself within the scope of the exception. If an exception does not apply, then applications for licenses to melt pennies and nickels should be transmitted to the Director, United States Mint; 801 9th Street NW, Washington, DC 20220. See 31 CFR 82.2(f).

Some individuals were concerned about how they can dispose of their bent or partial coins. Individuals can inquire of their local scrap metal dealers.

Some commenters indicated that the United States Mint's assertion that it lacks the capacity to process large volumes of bent or partial coin is disingenuous, because, in the past, large submissions of bent or partial coin were delivered directly to a third-party contractor, not to the United States Mint. However, after the program was suspended in 2018, the United States Mint developed new authentication techniques and procedures as recommended by the Treasury Department's Office of Inspector General to test and authenticate the genuineness of coins. To effectively authenticate the material with the new counterfeit detection methods that the United States Mint developed, the United States Mint could no longer accept redemption submissions at a third-party site. The United States Mint's coin authentication methods are time-consuming and can only be performed using specialized equipment at the United States Mint's Philadelphia location.

Some commenters suggested that the United States Mint develop a “trusted,” “preferred,” or “qualified” participant program whereby certain participants that meet additional requirements could be allowed to submit large volumes of coins for possible redemption. Many of these commenters did not specify the types of additional requirements that would qualify these participants as “trusted,” merely suggesting that certain participants should be allowed to redeem large amounts of coin. Other participants suggested site visits, background checks, a certification process, or compliance with industry standards. None of these controls separately or together, however, are sufficient to detect counterfeit coins. Every submission must be properly authenticated by the United States Mint to detect counterfeit coins, and background checks or site visits, for example, would not eliminate the need for this crucial step in the process.

A few commenters suggested that coins that were stockpiled during the program suspension should be exempted, essentially allowing these coins to be redeemed with no restrictions. In August 2018, the United States Mint stopped processing submissions to the redemption program due to the possibility of unlawful material being submitted for redemption and later formally suspended the redemption program in July 2019 (84 FR 35181). Members of the public have been on notice that the exchange program is subject to suspension and those who have stockpiled coins during its suspension assumed the risk of doing so.

Some commenters indicated that the United States Mint has not complied with the recommendations contained in the Department of the Treasury's Office of Inspector General's August 18, 2020, Audit Report on “Mint Controls Over Raw Materials and Coin Exchange Programs Need Improvement.” Following the issuance of these audit recommendations, the United States Mint hired additional staff and developed improved authentication procedures and testing methodology to detect counterfeit coins. To implement the new procedures, the United States Mint can no longer accept redemption submissions at a third-party site. The United States Mint's coin authentication methods are time-consuming and can only be performed using specialized equipment and processes developed and installed at the United States Mint's Philadelphia location.

Some commenters were concerned that unredeemable bent or partial coins would end up in landfills. Although the melting of pennies and nickels is prohibited in certain instances, the melting of dimes, quarters, and half-dollar coins, which historically have made up the majority of bent or partial coin redemptions, is not prohibited. The public may melt and reuse coins consistent with 31 CFR part 82, which reduces the likelihood that unredeemable coins will be landfilled. At least one commenter indicated that, if the program were closed, bent or partial coin would end up recycled as scrap metal sold on the secondary metals market.

Some commenters were concerned that closing the redemption program would lead to increased metals mining by requiring the United States Mint to purchase more virgin metal. The amount of metal contained in bent or partial coin redeemed is very small in the context of the larger metals market. In addition, melted coinage scrap must always be supplemented with pure nickel and copper to re-alloy the material for reuse. For example, quarters are made with a pure copper core and two cupronickel outer layers. These coins are permanently bonded in three layers, and the individual layers cannot be separated for reclamation. When quarters and other clad coins are melted, the resulting coinage scrap metal cannot be re-used for the core component, and significant amounts of nickel must be added to the scrap to create the alloy for the outer layer. The United States Mint's suppliers are limited in the amount of scrap that can be used to manufacture new coin roll. Roughly 25% of the material that the United States Mint purchases for circulating strip is returned to the strip supplier as “web-scrap.” This material must be recycled, along with submissions from the Uncurrent Coin Redemption Program, which leaves very little use for additional scrap material. The United States Mint suppliers that redeem scrap are not required to re-use coin scrap material to make new coinage material and may—and do—sell the excess coin scrap material as scrap. At least one commenter indicated that, if the program were closed, bent or partial coin would end up recycled as scrap metal sold on the secondary metals market. Therefore, the proposed limitations on submissions will not lead to an appreciable increase in the use of primary nickel or copper.

Some commenters suggested evaluating the environmental impact of the redemption program's closure under the National Environmental Policy Act (NEPA). It is the determination of the United States Mint that the final rule does not constitute a major Federal action significantly affecting the quality of the human environment, and, in accordance with the NEPA, neither an Environmental Assessment nor an Environmental Impact Statement is required.

Some commenters indicated that the redemption program is not a discretionary program and is instead mandated by law. The relevant statutes and regulations pertaining to the U.S. Department of Treasury and the overall statutory framework applicable to the program give broad discretion to the Secretary of the Treasury. The regulations at 31 CFR part 100, subpart C, are promulgated under 31 U.S.C. 321. By law, the Secretary of the Treasury “shall melt obsolete and worn United States coins withdrawn from circulation.” See 31 U.S.C. 5120. This statute simply prescribes the method of destruction that the Secretary is to employ when the Secretary withdraws obsolete and worn coins from circulation. There is no statutory requirement for the redemption of mutilated coins. Nor does the statute say how the Secretary shall acquire those coins, how the Secretary shall go about withdrawing those coins from circulation, or how the Secretary shall go about melting coins that have been withdrawn. These details are entirely committed to the Secretary's discretion, and pursuant to that discretion, the Mutilated Coin Redemption Program was established. See 31 CFR 100.11.

The expenses of the Mutilated Coin Redemption Program are entirely paid for through the United States Mint Public Enterprise Fund (PEF), a revolving fund that was created to fund all United States Mint operations in lieu of any appropriations from Congress. See 31 U.S.C. 5136. The PEF legislation makes clear that “all expenses incurred by the Secretary of the Treasury for operations and programs of the United States Mint that the Secretary of the Treasury determines, in the Secretary's sole discretion, to be ordinary and reasonable incidents of Mint operations and programs . . . shall be paid out of the Fund.” Id. (emphasis added). In other words, the Secretary of the Treasury is given sole discretion to decide whether the Mutilated Coin Redemption Program will operate and be funded. This issue was specifically considered by the court in Bramlett v. United States Dep't of the Treasury, No. 16-257 and 16-270, 2017 WL 1048366 at *5 (E.D. Pa. March 20, 2017), which held that the suspension or termination of the redemption program is committed to agency discretion by law.

Some commenters suggested that the United States Mint has no evidence of any counterfeit coins. There are indicators of current counterfeit coin fraud schemes aimed at the Mutilated Coin Redemption Program, the details of which are law enforcement sensitive. The United States Government was successful in forfeiting counterfeit coins in United States of America v. 5 Crates of Counterfeit Coins, CV 20-08487, in the United States District Court in the Central District of California. In declaring the coins in this case to be counterfeit and forfeited to the U.S., the court specifically relied on the United States Mint's counterfeit determination.

Some commenters expressed concern that closing the program would impact the quality of coins in circulation and thus undermine the public's confidence and trust in the currency system. Commenters, however, did not provide information supporting their belief that bent or partial coins will no longer be removed from circulation if the redemption program were closed. For example, bent and partial coins that are recovered from trash or recycling have already been removed from circulation, and there is no information available to the United States Mint or in the record to support the premise that somehow these coins will continue to circulate if the redemption program were closed. Likewise, individuals and business will continue to remove bent or partial coins from circulation.

Additional commenters suggested that closing the program will impact the United States Mint's Uncurrent Coin Redemption Program, due to bent or partial coins being diverted to the Uncurrent Coin Redemption Program. The United States Mint's Uncurrent Coin Redemption Program will continue in accordance with 31 CFR 100.10 and the Federal Reserve's Operating Circular 2. The Uncurrent Coin Redemption Program allows financial institutions to redeem whole U.S. coins which are merely worn or reduced in weight by natural abrasion, are readily and clearly recognizable as to genuineness and denomination, are machine countable, and do not include bent or partial coins. See 31 CFR 100.10. Neither the U.S. Mint nor the Federal Reserve will redeem any bent or partial coins.

Some commenters indicated that operating losses are not a valid reason for the United States Mint to end the redemption program, because the program has always operated at a loss. Commenters requested specific numbers detailing the program's operating losses. Costs to run the program in the past have included the payout of the face value of the coins being reimbursed, less the scrap credit the United States Mint receives from its suppliers for raw material, and the cost to travel to the suppliers to witness the melt, in addition to the resource costs for the various support personnel. In 2014—the last year the program was fully operational—the United States Mint paid out roughly $30 million in reimbursement and received roughly $5 million in scrap credit, for a total cost of about $25 million (not including the cost of travel, resources expended, and other costs of operating the program).

The United States Mint's programs are self-sustaining and operate at no cost to the taxpayer. The United States Mint has a fiduciary responsibility to be a prudent steward of its funds and to minimize expenses. The expenses of the Mutilated Coin Redemption Program are considered part of the United States Mint's circulating coin expenses and are paid from the United States Mint Public Enterprise Fund, a revolving fund that was created to fund all United States Mint operations in lieu of any appropriations from Congress. See 31 U.S.C. 5136. Circulating operations are financed by the sale of circulating coins to the Federal Reserve Bank. In recent years, the United States Mint's seigniorage, which is the difference between the face value and cost of producing circulating coinage, has significantly declined. For example, as of June 2024, year-to-date seigniorage has decreased 92% compared to June 2023 due to lower coin orders from the Federal Reserve Bank. In view of this decline, continued operation of the redemption program would not be financially responsible.

Some commenters point to a 2023 House Appropriations Committee report that indicated that the United States Mint should work with stakeholders to redeem mutilated coin within the existing regulations and expressed their concern that the United States Mint's proposed closure of the program is contrary to the intent of Congress. See H.R. Rep No. 118-145 (2023). In that report, the Committee indicated that it expects that the United States Mint will work with entities to recover coin to redeem bent and partial coin through the redemption program, because, according to the report, there was no other reasonable way to manage recovered coin. Consistent with the recommendations in the report, the United States Mint engaged with its program stakeholders through this formal rulemaking process. The United States Mint has addressed the concern regarding disposal of recovered coin to the extent possible by providing information on avenues for the disposal of coins following the program's closure. The comments received on the proposed rule closing the program recommended that the redemption program should re-open without any limitations on the amount of coin submitted. While the United States Mint has carefully considered these comments, as described above, there is no financially responsible way to ensure the integrity of the redemption program and to meet the full level of demand.

Several commenters suggested that the program should remain open for low denomination coins, such as pennies and nickels, because, in their view, the risk of counterfeiting lower denominations is lower or non-existent given the lack of economic incentive to counterfeit low denominations. While low denomination coins may be less likely to be counterfeited, this would not eliminate the need for the United States Mint to sample, inspect, and test coins submitted to be redeemed, regardless of denomination. Given these procedural constraints, the United States Mint could no longer accept redemption submissions at a third-party site and, as described above, does not have the capacity to do so in Philadelphia.

A couple of commenters suggested that the United States Mint develop a small administrative fee for bent or partial coin redemption. As discussed above, the redemption program's operating expenses are significant. A small administrative fee (one commenter suggested 1% of the value of each submission) would cover only a very small portion of the redemption program's operating costs.

Several commenters requested an extension of time to comment on the proposed rule. The United States Mint found the 60-day comment period length appropriate and provided a meaningful opportunity for interested parties to comment on the proposed rule. Of the commenters that submitted extension requests, most were able to provide substantive responses by the deadline.

The Office of Management and Budget has determined that this rule does not constitute a “significant regulatory action” under Executive Order 12866, as amended.

Pursuant to the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq. ), it is hereby certified that the revisions will not have a significant economic impact on a substantial number of small entities. First and foremost, the regulations do not directly regulate any entities. The redemption of bent or partial coins is a discretionary service offered to the public; participation is voluntary.

In accordance with section 3(a) of the Regulatory Flexibility Act, the United States Mint has reviewed the proposed regulation. While the United States Mint certifies that the final rule—or in this case—the removal thereof, will not have a significant economic impact on a substantial number of small entities given that the regulations do not directly regulate any entities, the United States Mint has prepared a Final Regulatory Flexibility Analysis in accordance with 5 U.S.C. 604.

The regulations at 31 CFR part 100, subpart C, are promulgated under 31 U.S.C. 321, and provide for the exchange of uncurrent, bent, partial, fused, and mixed coins. For the reasons herein, the United States Mint has decided to close the bent and partial coin exchange program, which is a discretionary program that is not mandated by law.

One commenter that appeared to be a small business indicated that closing the program would lead to closing their business but did not quantify the specific economic impact of the proposed changes to this voluntary and discretionary program. One of the commenters stated that they worked for the City of Juneau, Alaska, a small entity as defined by the RFA, and inquired about how to dispose of “several mutilated coins [accumulated] over the years.” The commenter did not express opposition to the program's closure and merely requested information about where to dispose of what appears to be a very small number of coins. The United States Mint has carefully considered the impact of the redemption program's closure on small businesses; however, for the reasons discussed herein, there is no financially responsible way for the United States Mint to expand the resources devoted to the program necessary to meet the full level of demand. The United States Mint has carefully reviewed all the comments that were submitted and, based on the data available, has analyzed the regulatory flexibility impact using reasonable assumptions.

The number of entities tendering significant quantities of coins for redemption in the past has been small. A large number of entities redeeming coins in the past were individuals—not businesses. A wide variety of businesses, such as municipal entities, recyclers, coin processors, amusement parks, auto shops, and waste management companies have applied for coins to be redeemed in the past. Data on the number of small entities voluntarily submitting coins to the redemption program was not provided by the commenters or within the public docket. Likewise, the United States Mint does not have data within its possession regarding the numbers of small entities submitting coins. The United States Mint has carefully reviewed all the comments that have been submitted and, based on the data available, has analyzed the regulatory flexibility impact using reasonable assumptions.

The United States Mint has not identified any reporting, recordkeeping, or other compliance requirements associated with the rule.

The United States Mint considered alternatives in promulgating this final rule. For example, the United States Mint considered re-opening the program under the parameters identified in the May 5, 2021, Federal Register document (86 FR 23877), proposing certain revisions to these regulations that would establish weight and shipment limits per participant and would prohibit the submission of certain kinds of coins or coins with certain kinds of damage. However, re-opening the program—even with these restrictions—would entail significant costs to the United States Mint. Further, the volume of coins submitted for possible redemption has greatly increased over the years, and there is no financially responsible way for the United States Mint to expand the resources devoted to the program necessary to meet the full level of demand. In response to the United States Mint's May 5, 2021, Federal Register document (86 FR 23877), several commenters expressed concern with the proposed 1,000 lb. per month submission limit, indicating that businesses have large volumes of coins to be redeemed that well exceed the monthly or annual limit. For example, one vendor alone indicated that at a rate of 1,000 lbs. per month, it would take over seven years just to redeem a portion of its inventory. The prior rulemaking indicated that, under these limits, participants would not be guaranteed the right to submit 1,000 lbs. per month; nor would the United States Mint have capacity even at this low rate to evaluate more than a small number of submissions per month.

The United States Mint considered re-opening the program for a short, limited time under the new parameters identified in the May 5, 2021, Federal Register document (86 FR 23877) with a published sunset date to allow those that have stored their mutilated coins in anticipation of the program reopening to submit their mutilated coins. It is clear, however, that there is no financially responsible way for the United States Mint to expand the resources devoted to the program necessary to meet the full level of demand, even for a limited time.

For the reasons set forth in the preamble, the United States Mint amends 31 CFR part 100 as follows:

Electronic Availability

This document and additional information concerning OFAC are available on OFAC's website: https://ofac.treasury.gov .

On April 15, 2021, the President, invoking the authority of, inter alia, the International Emergency Economic Powers Act (50 U.S.C. 1701 et seq. ) (IEEPA), issued Executive Order (E.O.) 14024, “Blocking Property With Respect To Specified Harmful Foreign Activities of the Government of the Russian Federation” (86 FR 20249, April 19, 2022).

On December 22, 2023, the President, invoking the authority of, inter alia, IEEPA, issued E.O. 14114, “Taking Additional Steps With Respect to the Russian Federation's Harmful Activities” (88 FR 89271, December 26, 2023). Among other things, E.O. 14114 amends E.O. 14024 to redesignate section 11 as section 12 and add a new section 11. Section 11(a) of E.O. 14024, as amended, provides that the Secretary of the Treasury, in consultation with the Secretary of State, and with respect to subsection (a)(ii) of this section, in consultation with the Secretary of State and the Secretary of Commerce, is hereby authorized to impose on a foreign financial institution the sanctions described in subsection (b) of this section, upon determining that the foreign financial institution has met the criteria in section 11(a)(i) or section 11(a)(ii). Section 11(a)(ii) of E.O. 14024, as amended, authorizes the imposition of sanctions on a foreign financial institution that has conducted or facilitated any significant transaction or transactions, or provided any service, involving Russia's military-industrial base, including the sale, supply, or transfer, directly or indirectly, to the Russian Federation of any item or class of items as may be determined by the Secretary of the Treasury, in consultation with the Secretary of State and the Secretary of Commerce.

E.O. 14114 also amends E.O. 14068 by striking subsection (a)(i) of section 1 of E.O. 14068 and inserting a new subsection (a)(i). Subsection (a)(i)(A) of E.O. 14068, as amended, provides that the importation and entry into the United States, including importation for admission into a foreign trade zone located in the United States, of the following products of Russian Federation origin: fish, seafood, and preparations thereof; alcoholic beverages; non-industrial diamonds; and any other products of Russian Federation origin, as may be determined by the Secretary of the Treasury, in consultation with the Secretary of State and the Secretary of Commerce is prohibited.

Subsection (a)(i)(B) of E.O. 14068, as amended, provides that the importation and entry into the United States, including importation for admission into a foreign trade zone located in the United States, of categories of any of the following products as may be determined by the Secretary of the Treasury, in consultation with the Secretary of State, the Secretary of Commerce, and the Secretary of Homeland Security, that were mined, extracted, produced, or manufactured wholly or in part in the Russian Federation, or harvested in waters under the jurisdiction of the Russian Federation or by Russia-flagged vessels, notwithstanding whether such products have been incorporated or substantially transformed into other products outside of the Russian Federation: fish, seafood, and preparations thereof; diamonds; and any other such products as may be determined by the Secretary of the Treasury, in consultation with the Secretary of State, the Secretary of Commerce, and the Secretary of Homeland Security is prohibited.

On December 22, 2023, pursuant to delegated authority, the Director of OFAC, in consultation with the Secretary of State and the Secretary of Commerce, issued a determination identifying certain items or classes of items pursuant to section 11(a)(ii) of E.O.14024, as amended by E.O. 14114. Also on December 22, 2023, pursuant to delegated authority, the Director of OFAC, in consultation with the Department of State, the Department of Commerce, and the Department of Homeland Security, issued a determination pursuant to sections 1(a)(i)(B), 1(b), and 5 of E.O. 14068 to determine that the prohibitions in section 1(a)(i)(B) of E.O. 14068 shall apply to certain categories of fish, seafood, and preparations thereof. Additionally, on December 22, 2023, the Director of OFAC, in consultation with the Department of State and the Department of Commerce, re-issued an amended determination pursuant to sections 1(a)(i)(A), 1(b), and 5 of E.O. 14068 that had previously determined that the prohibitions in section 1(a)(i) of E.O. 14068 applied to gold of Russian Federation origin. Each determination was made available on OFAC's website ( https://ofac.treasury.gov ) when it was issued. The text of these determinations is below.

Section 11(a)(ii) of Executive Order (E.O.) 14024 of April 15, 2021 (“Blocking Property With Respect To Specified Harmful Foreign Activities of the Government of the Russian Federation”), as amended by E.O. of December 22, 2023 (“Taking Additional Steps With Respect to the Russian Federation's Harmful Activities”), authorizes the Secretary of the Treasury, in consultation with the Secretary of State and the Secretary of Commerce, to impose sanctions on a foreign financial institution upon determining that the foreign financial institution has conducted or facilitated any significant transaction or transactions, or provided any service, involving Russia's military-industrial base, including the sale, supply, or transfer, directly or indirectly, to the Russian Federation, of any item or class of items as may be determined by the Secretary of the Treasury, in consultation with the Secretary of State and the Secretary of Commerce.

To further address the unusual and extraordinary threat to the national security, foreign policy, and economy of the United States described in E.O. 14024, as amended, and in consultation with the Department of State and the Department of Commerce and pursuant to 31 CFR 587.802, I hereby determine that section 11(a)(ii) of E.O. 14024 shall apply to items or classes of items listed in the Annex to this determination.

This determination shall take effect on December 22, 2023.

Pursuant to section 1(a)(i)(B), 1(b), and 5 of Executive Order (E.O.) 14068 of March 11, 2022 (“Prohibiting Certain Imports, Exports, and New Investment With Respect to Continued Russian Federation Aggression”), as amended by E.O. of December 22, 2023 (“Taking Additional Steps With Respect to the Russian Federation's Harmful Activities”), and 31 CFR 587.802, and in consultation with the Department of State, the Department of Commerce, and the Department of Homeland Security, I hereby determine that the prohibitions in section 1(a)(i)(B) of E.O. 14068 shall apply to the following categories of fish, seafood, and preparations thereof, that were produced wholly or in part in the Russian Federation, or harvested in waters under the jurisdiction of the Russian Federation or by Russia-flagged vessels, notwithstanding whether such fish, seafood, and preparations thereof have been incorporated or substantially transformed into another product outside of the Russian Federation: salmon, cod, pollock, and crab. As a result, the importation and entry into the United States, including importation for admission into a foreign trade zone located in the United States, of such salmon, cod, pollock, or crab is prohibited, except to the extent provided by law, or unless licensed or otherwise authorized by the Office of Foreign Assets Control.

This determination shall take effect on December 22, 2023.

Electronic Availability

This document and additional information concerning OFAC are available on OFAC's website: https://ofac.treasury.gov.

On September 4, 2024, OFAC issued GL 25E to authorize certain transactions otherwise prohibited by the Russian Harmful Foreign Activities Sanctions Regulations, 31 CFR part 587 (RuHSR). GL 25E superseded GL 25D. On September 5, 2024, OFAC issued GL 108, also authorizing transactions otherwise prohibited by the RuHSR and expiring November 6, 2024. On September 13, 2024, OFAC issued GLs 25F and 109, both authorizing transactions otherwise prohibited by the RuHSR. GL 25F superseded GL 25E. GL 109 expires November 13, 2024. Each GL was made available on OFAC's website ( https://ofac.treasury.gov ) when it was issued. The text of these GLs is provided below.

(a) Except as provided in paragraph (d) of this general license, all transactions ordinarily incident and necessary to the receipt or transmission of telecommunications involving the Russian Federation that are prohibited by the Russian Harmful Foreign Activities Sanctions Regulations, 31 CFR part 587 (RuHSR), are authorized.

(b) Except as provided in paragraph (d) of this general license, the exportation or reexportation, sale, or supply, directly or indirectly, from the United States or by U.S. persons, wherever located, to the Russian Federation of services incident to the exchange of communications over the internet, such as instant messaging, chat and email, social networking, sharing of photos and movies, web browsing, blogging, social media platforms, collaboration platforms, video conferencing, e-gaming, e-learning platforms, automated translation, web maps, user authentication services, web hosting, and domain name registration services, that is prohibited by the RuHSR, is authorized.

(c) Except as provided in paragraph (d) of this general license, the exportation or reexportation, sale, or supply, directly or indirectly, from the United States or by U.S. persons, to the Russian Federation of software, hardware, or technology incident to the exchange of communications over the internet is authorized, provided that:

(i) If the software, hardware, or technology is subject to the Export Administration Regulations, 15 CFR parts 730 through 774 (EAR), the exportation, reexportation, sale, or supply to the Russian Federation of such software, hardware, or technology is licensed or otherwise authorized by the Department of Commerce pursuant to the EAR; and

(ii) If the software, hardware, or technology is not subject to the EAR, the exportation, reexportation, sale, or supply to the Russian Federation of such software, hardware, or technology would be eligible for a license exception or otherwise authorized by the Department of Commerce if it were subject to the EAR.

(d) This general license does not authorize:

(1) The opening or maintaining of a correspondent account or payable-through account for or on behalf of any entity subject to Directive 2 under Executive Order (E.O.) 14024, Prohibitions Related to Correspondent or Payable-Through Accounts and Processing of Transactions Involving Certain Foreign Financial Institutions;

(2) Any debit to an account on the books of a U.S. financial institution of the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, or the Ministry of Finance of the Russian Federation;

(3) Any transactions prohibited by E.O. 14066 or E.O. 14068; or

(4) Any transactions involving Joint Stock Company Channel One Russia, Joint Stock Company NTV Broadcasting Company, Television Station Russia-1, Limited Liability Company Algoritm, New Eastern Outlook, Oriental Review, Garantex Europe OU, Autonomous Non-Profit Organization Dialog, or Autonomous Non-Profit Organization Dialog Regions, unless separately authorized.

(e) Effective September 4, 2024, General License No. 25D, dated June 12, 2024, is replaced and superseded in its entirety by this General License No. 25E.

Note to General License No. 25E. Nothing in this general license relieves any person from compliance with any other Federal laws or requirements of other Federal agencies, including export, reexport, and transfer (in-country) licensing requirements maintained by the Department of Commerce's Bureau of Industry and Security under the EAR.

(a) Except as provided in paragraph (d) of this general license, all transactions ordinarily incident and necessary to the receipt or transmission of telecommunications involving the Russian Federation that are prohibited by the Russian Harmful Foreign Activities Sanctions Regulations, 31 CFR part 587 (RuHSR), are authorized.

(b) Except as provided in paragraph (d) of this general license, the exportation or reexportation, sale, or supply, directly or indirectly, from the United States or by U.S. persons, wherever located, to the Russian Federation of services incident to the exchange of communications over the internet, such as instant messaging, chat and email, social networking, sharing of photos and movies, web browsing, blogging, social media platforms, collaboration platforms, video conferencing, e-gaming, e-learning platforms, automated translation, web maps, user authentication services, web hosting, and domain name registration services, that is prohibited by the RuHSR, is authorized.

(c) Except as provided in paragraph (d) of this general license, the exportation or reexportation, sale, or supply, directly or indirectly, from the United States or by U.S. persons, to the Russian Federation of software, hardware, or technology incident to the exchange of communications over the internet is authorized, provided that:

(i) If the software, hardware, or technology is subject to the Export Administration Regulations, 15 CFR parts 730 through 774 (EAR), the exportation, reexportation, sale, or supply to the Russian Federation of such software, hardware, or technology is licensed or otherwise authorized by the Department of Commerce pursuant to the EAR; and

(ii) If the software, hardware, or technology is not subject to the EAR, the exportation, reexportation, sale, or supply to the Russian Federation of such software, hardware, or technology would be eligible for a license exception or otherwise authorized by the Department of Commerce if it were subject to the EAR.

(d) This general license does not authorize:

(1) The opening or maintaining of a correspondent account or payable-through account for or on behalf of any entity subject to Directive 2 under Executive Order (E.O.) 14024, Prohibitions Related to Correspondent or Payable-Through Accounts and Processing of Transactions Involving Certain Foreign Financial Institutions;

(2) Any debit to an account on the books of a U.S. financial institution of the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, or the Ministry of Finance of the Russian Federation;

(3) Any transactions prohibited by E.O. 14066 or E.O. 14068; or

(4) Any transactions prohibited by the RuHSR involving one or more of the following entities, unless separately authorized:

(i) Joint Stock Company Channel One Russia;

(ii) Joint Stock Company NTV Broadcasting Company;

(iii) Television Station Russia-1;

(iv) Limited Liability Company Algoritm;

(v) New Eastern Outlook;

(vi) Oriental Review;

(vii) Garantex Europe OU;

(viii) Autonomous Non-Profit Organization Dialog;

(ix) Autonomous Non-Profit Organization Dialog Regions;

(x) Federal State Unitary Enterprise International Information Agency Rossiya Segodnya; or

(xi) Autonomous Non Profit Organization TV Novosti.

(e) Effective September 13, 2024, General License No. 25E, dated September 4, 2024, is replaced and superseded in its entirety by this General License No. 25F.

Note to General License No. 25F. Nothing in this general license relieves any person from compliance with any other Federal laws or requirements of other Federal agencies, including export, reexport, and transfer (in-country) licensing requirements maintained by the Department of Commerce's Bureau of Industry and Security under the EAR.

(a) Except as provided in paragraph (c) of this general license, all transactions prohibited by Executive Order (E.O.) 14024 that are ordinarily incident and necessary to one of the following activities involving the blocked persons described in paragraph (b) are authorized through 12:01 a.m. eastern standard time, November 6, 2024, provided that any payment to a blocked person must be made into a blocked account in accordance with the Russian Harmful Foreign Activities Sanctions Regulations, 31 CFR part 587 (RuHSR):

(1) The safe docking and anchoring in port of any vessels in which any person listed in paragraph (b) of this general license has a property interest (the “blocked vessels”);

(2) The preservation of the health or safety of the crew of any of the blocked vessels; or

(3) Emergency repairs of any of the blocked vessels or environmental mitigation or protection activities relating to any of the blocked vessels.

(b) The authorization in paragraph (a) of this general license applies to the following blocked persons listed on the Office of Foreign Assets Control's Specially Designated Nationals and Blocked Persons List and any entity in which any of the following persons own, directly or indirectly, individually or in the aggregate, a 50 percent or greater interest:

(1) Gotik Shipping Co; or

(2) Plio Energy Cargo Shipping OPC Private Limited.

(c) This general license does not authorize:

(1) The entry into any new commercial contracts involving the property or interests in property of any blocked persons, including the blocked entities described in paragraph (b) of this general license, except as authorized by paragraph (a);

(2) The offloading of any cargo onboard any of the blocked vessels, including the offloading of liquefied natural gas of Russian Federation origin, except for the offloading of cargo that is ordinarily incident and necessary to address vessel emergencies authorized pursuant to paragraph (a) of this general license;

(3) Any transactions related to the sale of liquefied natural gas of Russian Federation origin;

(4) Any transactions prohibited by Directive 2 under E.O. 14024, Prohibitions Related to Correspondent or Payable-Through Accounts and Processing of Transactions Involving Certain Foreign Financial Institutions;

(5) Any transactions prohibited by Directive 4 under E.O. 14024, Prohibitions Related to Transactions Involving the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, and the Ministry of Finance of the Russian Federation; or

(6) Any transactions otherwise prohibited by the RuHSR, including transactions involving the property or interests in property of any person blocked pursuant to the RuHSR, other than transactions involving the blocked persons described in paragraph (b) of this general license, unless separately authorized.

(a) Except as provided in paragraph (b) of this general license, all transactions prohibited by Executive Order (E.O.) 14024 that are ordinarily incident and necessary to the wind down of any transaction involving one or more of the following blocked entities are authorized through 12:01 a.m. eastern standard time, November 13, 2024, provided that any payment to a blocked person must be made into a blocked account in accordance with the Russian Harmful Foreign Activities Sanctions Regulations, 31 CFR part 587 (RuHSR):

(1) Federal State Unitary Enterprise International Information Agency Rossiya Segodnya;

(2) Autonomous Non Profit Organization TV Novosti; or

(3) Any entity in which one or more of the above persons own, directly or indirectly, individually or in the aggregate, a 50 percent or greater interest.

(b) This general license does not authorize:

(1) Any transactions prohibited by Directive 2 under E.O. 14024, Prohibitions Related to Correspondent or Payable-Through Accounts and Processing of Transactions Involving Certain Foreign Financial Institutions;

(2) Any transactions prohibited by Directive 4 under E.O. 14024, Prohibitions Related to Transactions Involving the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, and the Ministry of Finance of the Russian Federation; or

(3) Any transactions otherwise prohibited by the RuHSR, including transactions involving any person blocked pursuant to the RuHSR other than the blocked persons described in paragraph (a) of this general license, unless separately authorized.

I. Table of Abbreviations CFR Code of Federal Regulations DHS Department of Homeland Security FR Federal Register NPRM Notice of proposed rulemaking § Section U.S.C. United States Code II. Background Information and Regulatory History

The Coast Guard is issuing this temporary rule under authority in 5 U.S.C. 553(b)(B). This statutory provision authorizes an agency to issue a rule without prior notice and opportunity to comment when the agency for good cause finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” The Coast Guard finds that good cause exists for not publishing a notice of proposed rulemaking (NPRM) with respect to this rule because the fireworks shows on September 25 and 27, 2024, pose a significant safety hazard to the public. It is impracticable to publish an NPRM because we must establish this safety zone by September 25, 2024.

Also, under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making this rule effective less than 30 days after publication in the Federal Register . Delaying the effective date of this rule would be impracticable because immediate action is needed to respond to the potential safety hazards associated with the two firework shows on September 25 and 27, 2024, between MM 190.5 and 191.5.

The Coast Guard is issuing this rule under authority in 46 U.S.C. 70034. The Captain of the Port Sector Ohio Valley (COTP) has determined that potential hazards associated with fireworks launched from a barge starting September 25 and September 27, 2024, will be a safety concern for anyone within MM 190.5 to 191.5 of the river. Hazards from firework displays include accidental discharge of fireworks, dangerous projectiles, and falling hot embers or other debris. This rule is needed to protect personnel, vessels, and the marine environment in the navigable waters within the safety zone during the fireworks shows.

The COTP is proposing to establish a safety zone from 8:30 p.m. to 10 p.m. on both September 25 and 27, 2024. The safety zone would cover all navigable waters within MM 190.5 to 191.5 on the Cumberland River located nearby to Broadway Riverfront Park, Nashville, TN. The duration of the zone is intended to ensure the safety of vessels and these navigable waters before, during, and after the scheduled fireworks displays. No vessel or person would be permitted to enter the safety zone without obtaining permission from the COTP or a designated representative. The regulatory text we are proposing appears at the end of this document.

We developed this rule after considering numerous statutes and Executive orders related to rulemaking. Below we summarize our analyses based on a number of these statutes and Executive orders, and we discuss First Amendment rights of protestors.

Executive Orders 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits. This rule has not been designated a “significant regulatory action,” under section 3(f) of Executive Order 12866, as amended by Executive Order 14094 (Modernizing Regulatory Review). Accordingly, this rule has not been reviewed by the Office of Management and Budget (OMB).

This regulatory action determination is based on the size, location, duration, and time-of-day of the safety zone. This safety zone impacts a small designated area of the Cumberland River for approximately 90 minutes during the evenings of September 25 and 27, 2024, when vessel traffic is normally low. Moreover, the Coast Guard would issue a Broadcast Notice to Mariners via VHF-FM marine channel 16 about the zone, and the rule would allow vessels to seek permission to enter the zone.

The Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, as amended, requires Federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities.

While some owners or operators of vessels intending to transit the safety zone may be small entities, for the reasons stated in section V.A above, this rule will not have a significant economic impact on any vessel owner or operator.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding this rule. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please call or email the person listed in the FOR FURTHER INFORMATION CONTACT section.

Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247). The Coast Guard will not retaliate against small entities that question or complain about this rule or any policy or action of the Coast Guard.

This rule will not call for a new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).

A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on the States, on the relationship between the National Government and the States, or on the distribution of power and responsibilities among the various levels of government. We have analyzed this rule under that Order and have determined that it is consistent with the fundamental federalism principles and preemption requirements described in Executive Order 13132.

Also, this rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does not have a substantial direct effect on one or more Indian Tribes, on the relationship between the Federal Government and Indian Tribes, or on the distribution of power and responsibilities between the Federal Government and Indian Tribes.

The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or Tribal government, in the aggregate, or by the private sector of $100,000,000 (adjusted for inflation) or more in any one year. Though this rule will not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.

We have analyzed this rule under Department of Homeland Security Directive 023-01, Rev. 1, associated implementing instructions, and Environmental Planning COMDTINST 5090.1 (series), which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f), and have determined that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This rule involves a safety zone from MM 190.5 to 191.5 lasting up to 90 minutes on September 25 and 27, 2024, that would prohibit entry within one mile of a fireworks barge. It is categorically excluded from further review under paragraph L60(a) of Appendix A, Table 1 of DHS Instruction Manual 023-01-001-01, Rev. 1. A Record of Environmental Consideration supporting this determination is available in the docket. For instructions on locating the docket, see the ADDRESSES section of this preamble.

The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to call or email the person listed in the FOR FURTHER INFORMATION CONTACT section to coordinate protest activities so that your message can be received without jeopardizing the safety or security of people, places, or vessels.

For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 165 as follows:

In a document published in the Federal Register on September 25, 2023, at 88 FR 65641, VA proposed to amend its adjudication regulations pertaining to burial benefits to conform to recent statutory changes enacted by sections 2201 and 2202 of the Johnny Isakson and David P. Roe, M.D. Veterans Health Care and Benefits Improvement Act of 2020 (Pub. L. 116-315), and section 102(c) of Division CC (Burial Equity for Guards and Reserves Act) of the Consolidated Appropriations Act, 2022 (Pub. L. 117-103).

VA provided a 60-day public comment period, which ended on November 24, 2023, and received six comments in response to the notice of proposed rulemaking. All comments generally agreed with the amendments in the proposed rulemaking. One commenter stated: “I support the Department of Veterans Affairs proposed rule expanding burial benefits for veterans and their families. I urge the VA to finalize this rule as soon as possible.” Another commenter explained that “[t]his rule change makes sense and is the least we can do to honor our Veterans at the end of life.” VA appreciates these responses and will not make any changes based upon those comments.

One commenter provided support for the proposed rule but addressed an area of improvement for non-service-connected burial benefits. This commenter highlighted the two-year time limit to submit a claim for non-service-connected burial benefits provided in proposed 38 CFR 3.1703(a)(1), which stated that “VA must receive a claim for the non-service-connected burial allowance for veterans described within § 3.1705(b), § 3.1706(b), or § 3.1708(b) no later than 2 years after the burial of the veteran.” This commenter further explained that “due to the relatively low numbers concerning veterans who currently take advantage of these benefits, the time limit on claims should be removed to ensure that more veterans' families receive this benefit and do not have to pay for the services themselves.”

VA appreciates the commenter's concern; however, the time limit referenced in 38 CFR 3.1703 must adhere to the statutory limitations provided within 38 U.S.C. 2304. Section 2304 states that applications for payments under 38 U.S.C. 2303(a)(2)(B) and (C) must be filed within two years after the burial of the Veteran. Section 2303(a)(2)(B) refers to deceased Veterans who, at the time of non-service-connected death, were in receipt of service-connected disability compensation (or but for the receipt of retirement pay would have been entitled to such compensation) or were in receipt of pension. Section 2303(a)(2)(C) refers to deceased Veterans for whom the Secretary determines there is no next of kin or other person claiming the body and that there are not sufficient resources available to cover burial and funeral expenses. Aside from this two-year statutory time limit as implemented in 38 CFR 3.1703(a)(1), there are no other time limitations to file claims for burial benefits under 38 CFR part 3, subpart B. No substantive changes were made pursuant to this comment, as legislative action would be required to amend the two-year time limit. But in reviewing this comment, VA did discover a technical error in the proposed changes to 38 CFR 3.1703(a)(1), which VA corrects in this final rule by removing an erroneous cross-reference to 38 CFR 3.1706(b), as described below.

Per 38 U.S.C. 2304, the two-year time limit to submit a claim for non-service-connected burial benefits applies to applications for payments under 38 U.S.C. 2303(a)(2)(B) and (C). This time limit does not apply to 38 U.S.C. 2303(a)(2)(A), which pertains to Veterans who die of a non-service-connected disability while hospitalized by VA ( i.e., in a VA facility as defined in 38 U.S.C. 1701(3) to which the deceased Veteran was properly admitted for hospital, nursing home, or domiciliary care under 38 U.S.C. 1710 or 1711(a), or in an institution at which the deceased Veteran was, at the time of death, receiving hospital care in accordance with 38 U.S.C. 1703A, 8111, and 8153, nursing home care under 38 U.S.C. 1720, or nursing home care for which payments are made under 38 U.S.C. 1741).

VA's proposed changes to 38 CFR 3.1703(a)(1) included cross-references to 38 CFR 3.1705(b) and § 3.1708(b)—the implementing regulatory provisions for 38 U.S.C. 2303(a)(2)(B) and (C), respectively, for which 38 U.S.C. 2304's two-year time limit applies. However, VA erroneously proposed to also include a cross-reference to 38 CFR 3.1706(b), the implementing regulatory provision for 38 U.S.C. 2303(a)(2)(A), pertaining to Veterans who die of a non-service-connected disability while hospitalized by VA. Because 38 U.S.C. 2304's two-year time limit does not apply to 38 U.S.C. 2303(a)(2)(A), VA erred by proposing to include the corresponding regulatory provision, 38 CFR 3.1706(b), in 38 CFR 3.1703(a)(1)'s description of the circumstances in which the statutory two-year time limit applies. Accordingly, VA has removed the reference to 38 CFR 3.1706 in 38 CFR 3.1703(a)(1), as no time limit applies to a claim for the non-service-connected burial allowance for a Veteran who died while hospitalized by VA.

Finally, VA makes one clarifying change to 38 CFR 3.1704 (Burial allowance based on service-connected death). VA revises paragraph (c)(2)'s reference to 38 CFR 3.1707 to specifically reference 38 CFR 3.1707(b), because a claim for the plot or interment allowance for service-connected death is payable under 38 CFR 3.1707(b) but is not payable under 38 CFR 3.1707(c). Under § 3.1707(c)(1), the plot or interment allowance payable based on burial in other than a State or Tribal veterans cemetery requires a veteran to be eligible for a burial allowance based on non-service-connected death under § 3.1705.

In summary, VA adopts the proposed rule as final, except for the technical amendments to 38 CFR 3.1703 and 3.1704 as described above.

Executive Order 12866 (Regulatory Planning and Review) directs agencies to assess the costs and benefits of available regulatory alternatives and, when regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, and other advantages; distributive impacts; and equity). Executive Order 13563 (Improving Regulation and Regulatory Review) emphasizes the importance of quantifying both costs and benefits, reducing costs, harmonizing rules, and promoting flexibility. Executive Order 14094 (Executive Order on Modernizing Regulatory Review) supplements and reaffirms the principles, structures, and definitions governing contemporary regulatory review established in Executive Order 12866 of September 30, 1993 (Regulatory Planning and Review), and Executive Order 13563 of January 18, 2011 (Improving Regulation and Regulatory Review). The Office of Information and Regulatory Affairs has determined that this rulemaking is a significant regulatory action under Executive Order 12866, as amended by Executive Order 14094. The Regulatory Impact Analysis associated with this rulemaking can be found as a supporting document at www.regulations.gov.

The Secretary hereby certifies that this final rule will not have a significant economic impact on a substantial number of small entities as they are defined in the Regulatory Flexibility Act (5 U.S.C. 601-612). As this final rulemaking will expand and increase benefits, it will not have a significant economic impact on a substantial number of small entities as the benefits received by the entities entitled to them were found to be de minimis. Therefore, pursuant to 5 U.S.C. 605(b), the initial and final regulatory flexibility analysis requirements of 5 U.S.C. 603 and 604 do not apply.

The Unfunded Mandates Reform Act of 1995 requires, at 2 U.S.C. 1532, that agencies prepare an assessment of anticipated costs and benefits before issuing any rule that may result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more (adjusted annually for inflation) in any one year. This final rule will have no such effect on State, local, and tribal governments, or on the private sector.

This final rule includes provisions constituting revisions to a couple of current/valid collections of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3521). The revisions also require approval by the Office of Management and Budget (OMB). Accordingly, under 44 U.S.C. 3507(d), VA has submitted a copy of this rulemaking action to OMB for review and approval.

OMB has received the revised collections of information. OMB's receipt of the revised collections of information is not an approval to conduct or sponsor an information collection under the Paperwork Reduction Act of 1995. In accordance with 5 CFR 1320, the revised collections of information associated with this rulemaking are not approved by OMB at this time. OMB's approval of the revised collections of information will occur within 30 days after the Final rulemaking publishes. If OMB does not approve the revised collections of information as requested, VA will immediately remove the provision containing a revised collection of information or take such other action as is directed by OMB.

The revised collections of information contained in 38 CFR 3.1700, 3.1701, 3.1702, 3.1703, 3.1704, 3.1705, 3.1706, 3.1707, 3.1708, 3.1709, 3.1711 are described immediately following this paragraph, under its respective title.

Title: Application for Burial Benefits (Under 38 U.S.C. Chapter 23).

VA Form No: 21P-530EZ.

OMB Control No: 2900-0003.

CFR Provisions: 38 CFR 3.1700, 3.1701, 3.1702, 3.1703, 3.1704, 3.1705, 3.1706, 3.1707, 3.1708, 3.1709, 3.1711.

• Summary of revised collection of information: The revised collection of information in 38 CFR 3.1700, 3.1701, 3.1702, 3.1703, 3.1704, 3.1705, 3.1706, 3.1707, 3.1708, 3.1709, and 3.1711 will require the respondent to provide information indicating whether the Veteran was buried in a covered Veterans' cemetery.

• Description of need for information and use of information: VA, through the Veterans Benefits Administration (VBA), administers an integrated program of benefits and services, established by law, for Veterans, service personnel, and their dependents and/or beneficiaries. Under the authority of 38 U.S.C. 2302, 2303, 2304, 2307, and 2308, VA will pay burial benefits upon the death of a Veteran to certain eligible claimants. The information will be used by VA to determine if the claimant is eligible to receive expanded transportation benefits due to the Veteran's burial in a covered Veterans' cemetery.

• Description of likely respondents: The respondent population for VA Form 21P-530EZ will be primarily composed of survivors of deceased Veterans establishing eligibility to VA burial benefits.

• Estimated number of respondents: 132,055 per year.

• Estimated frequency of responses: One time per year.

• Estimated average burden per response: 30 minutes.

• Estimated total annual reporting and recordkeeping burden: 66,028 burden hours (132,055 × 30/60).

• Estimated cost to respondents per year: VA estimates the annual cost to respondents to be $2,078,561.44 (66,028 burden hours × $31.48 per hour).

* To estimate the total information collection burden cost, VA used the 2023 Bureau of Labor Statistics (BLS) mean hourly wage for hourly wage for “all occupations” of $31.48 per hour. This information is available at https://www.bls.gov/oes/current/oes_nat.htm#13-0000.

The revised collection of information contained in 38 CFR 3.1700, 3.1701, 3.1702, 3.1703, 3.1704, 3.1705, 3.1706, 3.1707, 3.1708, 3.1709, 3.1711 is described immediately following this paragraph, under its respective title.

Title: State or Tribal Organization Application for Interment Allowance (Under 38 U.S.C. Chapter 23).

VA Form No: 21P-530a.

OMB Control No: 2900-0565.

CFR Provisions: 38 CFR 3.1700, 3.1701, 3.1702, 3.1703, 3.1704, 3.1705, 3.1706, 3.1707, 3.1708, 3.1709, 3.1711.

• Summary of revised collection of information: The revised collection of information in 38 CFR 3.1700, 3.1701, 3.1702, 3.1703, 3.1704, 3.1705, 3.1706, 3.1707, 3.1708, 3.1709, and 3.1711 will require the respondent to provide information to determine if a Tribal organization is eligible for interment allowance for an eligible Veteran buried on trust land owned by, or held in trust for, a Tribal organization.

• Description of need for information and proposed use of information: VA, through VBA, administers an integrated program of benefits and services, established by law, for Veterans, service personnel, and their dependents and/or beneficiaries. Under the authority of 38 U.S.C. 2302, 2303, 2304, 2307, and 2308, VA will pay burial benefits upon the death of a Veteran to certain eligible claimants. The information will be used by VA to determine if a Tribal organization is eligible to receive plot or interment benefit due to the Veteran's burial on trust land owned by, or held in trust for, a Tribal organization.

• Description of likely respondents: The respondent population for VA Form 21P-530a will be composed of individuals from State or Tribal Organizations that are applying for benefits to establish entitlement to the plot or internment allowance for eligible Veterans who have been buried in a State Veterans' cemetery or on Tribal Trust land.

• Estimated number of respondents: 33,594 per year.

• Estimated frequency of responses: One time per year.

• Estimated average burden per response: 5 minutes.

• Estimated total annual reporting and recordkeeping burden: The burden hours are estimated to be 2,800 (33,594 × 5/60).

• Estimated cost to respondents per year: VA estimates the annual cost to respondents to be $88,144 (2,800 burden hours for respondents × $31.48 per hour).

* To estimate the total information collection burden cost, VA used the 2023 Bureau of Labor Statistics (BLS) mean hourly wage for hourly wage for “all occupations” of $31.48 per hour. This information is available at https://www.bls.gov/oes/current/oes_nat.htm#13-0000.

Pursuant to Subtitle E of the Small Business Regulatory Enforcement Fairness Act of 1996 (known as the Congressional Review Act) (5 U.S.C. 801 et seq. ), the Office of Information and Regulatory Affairs designated this rule as not satisfying the criteria under 5 U.S.C. 804(2).

Denis McDonough, Secretary of Veterans Affairs, approved and signed this document on September 19, 2024, and authorized the undersigned to sign and submit the document to the Office of the Federal Register for publication electronically as an official document of the Department of Veterans Affairs.

For the reasons stated in the preamble, the Department of Veterans Affairs amends 38 CFR part 3 as set forth below:

Throughout this document, “we,” “us,” and “our” refer to the EPA.

On July 2, 2024, the EPA proposed to approve the California Air Resources Board's (CARB) submittal of a SIP revision adopted by the SMAQMD. 1 As discussed in our proposed action, this SIP revision adopted portions of several permits issued under the District's SIP-approved New Source Review (NSR) permit program (“District Permits”) for submittal into the SIP. These District Permits are relied upon to implement RACT for major sources of NO X , and we proposed to determine that these District Permits would comply with the EPA's Startup, Shutdown, and Malfunction (SSM) policy and other applicable Clean Air Act (CAA or “Act”) requirements. Based on our review, we proposed to determine that these District Permits, in conjunction with the SIP-approved NO X limits already established in Rule 411 (NO X from Boilers, Process Heaters and Steam Generators) and Rule 413 (Stationary Gas Turbines), implement RACT for each major NO X source in the District. We therefore also proposed to approve the major source NO X RACT element of the 2017 RACT SIP for the 2008 ozone NAAQS.

A list of individual permits contained in this submittal is included in Table 2 below.

The EPA's proposed action provided a 30-day public comment period. During this period, we received no comments.

No comments were submitted on the proposed action, and there is no change to our assessment of the SIP revision as described in our proposed action. Therefore, as authorized in section 110(k)(3) of the Act, the EPA is approving these District Permits into the California SIP. In addition, we are approving the major source NO X element for SMAQMD's RACT obligation for the 2008 ozone NAAQS. This approval corrects all deficiencies identified in our June 30, 2023 partial disapproval of the major NO X element of the 2017 RACT SIP (88 FR 42248), permanently stopping all sanction clocks associated with that partial disapproval. Moreover, this approval corrects the final remaining deficiency identified in our February 3, 2017 finding of failure to submit action for the SMAQMD's 2008 ozone NAAQS RACT SIP obligation (82 FR 9158). In addition, it terminates the EPA's obligation to promulgate a Federal Implementation Plan in response to that action.

In this rule, the EPA is finalizing regulatory text that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, the EPA is finalizing the incorporation by reference of the District Permits contained in the submitted SIP revision and listed in Table 2 of this preamble, which establish NO X emission limits for specific major sources in the District. The EPA has made, and will continue to make, these documents available through https://www.regulations.gov and at the EPA Region IX Office (please contact the person identified in the FOR FURTHER INFORMATION CONTACT section of this preamble for more information).

Under the Clean Air Act, the Administrator is required to approve a SIP submission that complies with the provisions of the Act and applicable federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, the EPA's role is to approve State choices, provided that they meet the criteria of the Clean Air Act. Accordingly, this action merely approves State law as meeting federal requirements and does not impose additional requirements beyond those imposed by State law. For that reason, this action:

• Is not a significant regulatory action subject to review by the Office of Management and Budget under Executive Orders 12866 (58 FR 51735, October 4, 1993) and 14094 (88 FR 21879, April 11, 2023);

• Does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq. );

• Is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq. );

• Does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4);

• Does not have federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);

• Is not subject to Executive Order 13045 (62 FR 19885, April 23, 1997) because it approves a State program;

• Is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001); and

• Is not subject to requirements of Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the Clean Air Act.

In addition, the SIP is not approved to apply on any Indian reservation land or in any other area where the EPA or an Indian Tribe has demonstrated that a Tribe has jurisdiction. In those areas of Indian country, the rule does not have Tribal implications and will not impose substantial direct costs on Tribal governments or preempt Tribal law as specified by Executive Order 13175 (65 FR 67249, November 9, 2000).

Executive Order 12898 (Federal Actions To Address Environmental Justice in Minority Populations and Low-Income Populations, 59 FR 7629, February 16, 1994) directs Federal agencies to identify and address “disproportionately high and adverse human health or environmental effects” of their actions on communities with environmental justice (EJ) concerns to the greatest extent practicable and permitted by law. The EPA defines EJ as “the fair treatment and meaningful involvement of all people regardless of race, color, national origin, or income with respect to the development, implementation, and enforcement of environmental laws, regulations, and policies.” The EPA further defines the term fair treatment to mean that “no group of people should bear a disproportionate burden of environmental harms and risks, including those resulting from the negative environmental consequences of industrial, governmental, and commercial operations or programs and policies.”

The District did not evaluate EJ considerations as part of its SIP submittal; the CAA and applicable implementing regulations neither prohibit nor require such an evaluation. The EPA did not perform an EJ analysis and did not consider EJ in this action. Due to the nature of the action being taken here, this action is expected to have a neutral to positive impact on the air quality of the affected area. Consideration of EJ is not required as part of this action, and there is no information in the record inconsistent with the stated goals of Executive Order 12898 of achieving EJ for communities with EJ concerns.

This action is subject to the Congressional Review Act (CRA), and the EPA will submit a rule report to each House of the Congress and to the Comptroller General of the United States. This action is not a “major rule” as defined by 5 U.S.C. 804(2).

Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by November 25, 2024. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this rule for the purposes of judicial review, nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements (see section 307(b)(2)).

For the reasons stated in the preamble, the Environmental Protection Agency amends part 52, chapter I, title 40 of the Code of Federal Regulations as follows:

Regulations for the blueline tilefish fishery are at 50 CFR part 648. The regulations at § 648.295(b)(2)(ii) require that when NMFS projects that blueline tilefish catch will reach 100 percent of the total allowable landings (TAL), the Regional Administrator must close the commercial blueline tilefish fishery for the remainder of the fishing year. No vessel may retain or land blueline tilefish in or from the Tilefish Management Unit after the announced closure date. NMFS monitors the blueline tilefish fishery catch based on dealer reports, state data, and other available information. NMFS must publish a notice in the Federal Register notifying blueline tilefish vessel and dealer permit holders of the closure date when 100 percent of the TAL is projected to be landed.

The Regional Administrator has determined, based on dealer reports and other available information, that the blueline tilefish commercial fishery has caught 100 percent of the TAL. Effective September 23, 2024 vessels may not retain or land blueline tilefish in or from the Tilefish Management Unit through December 31, 2024.

NMFS issues this action pursuant to section 305(d) of the Magnuson-Stevens Fishery Conservation and Management Act. This action is required by 50 CFR part 648, which was issued pursuant to section 304(b), and is exempt from review under Executive Order 12866.

NMFS finds good cause pursuant to 5 U.S.C. 553(b)(B) and 5 U.S.C. 553(d)(3) to waive prior notice and the opportunity for public comment and the delayed effectiveness period because it would be contrary to the public interest and impracticable. Data and other information indicating the blueline tilefish commercial fishery has landed 100 percent of the TAL have only recently become available. Landings data are updated by dealer reports dealers on a weekly basis, and NMFS monitors data as catch increases toward the limit. This action is routine and formulaic. The regulations at § 648.295(b)(2)(ii) require such action to ensure that blueline tilefish commercial vessels do not exceed the 2024 TAL. If implementation of this action is delayed, the Annual Catch Limit for the 2024 fishing year may be exceeded, thereby undermining the conservation objectives of the Tilefish Fishery Management Plan. Also, the public had prior notice and full opportunity to comment on this process when the provisions regarding closures and the 2024 quota levels were put in place.